LATIN America - which United States investors fled in panic after the collapse of the Mexican peso in December - is once again drawing the attention of the financial community.
And while it may be premature to suggest that the region is fully back into Wall Street's good graces, there is clearly a renewed interest today in Latin America on the part of brokerage houses, public corporations, and investment banks. ''The [economic and market] fundamentals for Latin America are starting to look good again, certainly far better than earlier this year,'' says Pierre Durand, a managing director at investment house Donaldson, Lufkin & Jenrette, Inc., New York.
Earlier this year, DLJ set up a new business group aimed at developing a full range of investment opportunities in Latin America, including a retail brokerage business, mergers and acquisition activities, and merchant banking. ''This seemed like a good time to expand investment ... in Latin America,'' says Mr. Durand, who heads up DLJ's sales and trading activities there. DLJ now has about 30 employees working on its Latin American projects; it is also considering opening an office in Brazil.
DLJ is not alone in looking southward again. Prior to the recent collapse of the Mexican peso - and the subsequent financial bailout of Mexico by the US and the International Monetary Fund - the region south of the Rio Grande was considered one of the hottest ''emerging markets'' for global investors. Investment dollars, from the US and abroad, poured into Latin America in the late 1980s and early '90s. But much of that capital has been withdrawn in recent months.
Now, a flow of capital appears to be returning. And some investment houses are cautiously touting investments in the area.
In a report released in June, for example, investment house Salomon Brothers Inc. concluded that investors should consider looking for selective financial opportunities in Mexico, including ''short-term, high interest-bearing sovereign instruments, and attractive corporate sectors.''
''We know that capital is now flowing back into Mexico,'' although it ''is difficult to quantify'' the amount, says Nariman Behravesh, who heads up the international economic section for DRI-McGraw Hill, an economic-consulting firm in Lexington, Mass.
The return of capital flows to Mexico - and Latin America, in general - is ''remarkable,'' Mr. Behravesh comments. After a 1982 economic crisis in Mexico, ''it took some eight years'' for US and other outside investors to feel free to put new money into that nation's economy. That compares to just a few months in the current situation. ''A lot of [mutual] fund managers are reassessing Mexico, and some large US corporations are making new production plans there,'' Behravesh says.
While retail investments, or stock purchases, to Latin America fell off sharply after December, ''strategic [corporate] investments never really stopped. They only slowed down,'' explains Carlos Garcia, a managing director of DLJ, who heads up the firm's Latin American merchant-banking activities.
''New strategic investments'' are flowing into the region, he says.
According to DRI, Latin America should post positive economic growth of a real 1.5 percent to 2 percent this year. While that is below the projected growth of 2.6 percent for the world, and a 5 percent average for all developing nations, it must be considered ''fairly decent'' considering that the Mexican economy alone this year will shrink by about 3 percent, Behravesh says. Next year, growth in Latin America should reach 4 percent; Mexico, 2 percent.
Argentina and Chile also appear ''well-positioned'' for continued growth, Behravesh says. Stock markets in these nations and Brazil - which account for 74 percent of Latin America's gross domestic product - have all rebounded from their March lows; Chile's market is 20 percent higher than its December level.
The result: Latin America seems to be ''on the way back,'' says C. Michael Aho, who tracks the region for investment house Prudential Securities Inc. But he worries about Brazil because of recent rapid growth and political turmoil.
Brazil's equities market has been hard-hit in recent months. Still, some investment specialists, such as Steve Merrell, portfolio manager for IDS-Fixed Income Advisors in Minneapolis, believe the country's market has ''enormous potential,'' provided the government can maintain a firm grip on economic policy.