Hedge Funds Move on 'Donroe Doctrine'... Exploring Investment Opportunities in Central and South America

Interest in Colombian and Cuban Sovereign Bonds
"Risks Remain: Political Instability and Rebuilding Aging Infrastructure"

The Wall Street Journal (WSJ) reported on the 11th (local time) that hedge fund investors have begun to focus on investment opportunities in Central and South America that could arise from U.S. President Donald Trump's 'Donroe Doctrine'-Trump's version of isolationist Monroe Doctrine. As President Trump accelerates efforts to expand U.S. influence in the Western Hemisphere, taking the ousting of Venezuelan President Nicolas Maduro as an opportunity, American financial capital is also moving in line with this trend.

AP Yonhap News

WSJ noted that several hedge funds and other investment firms are already planning business trips to Caracas, the capital of Venezuela, or are researching investment targets such as Venezuela's outstanding sovereign bonds. Some are also paying attention to the sovereign bonds of Colombia and Cuba, countries under diplomatic pressure from President Trump. Additionally, WSJ pointed out that the stock prices of small banks in Greenland, a Danish territory that President Trump has mentioned potentially incorporating into the United States, have recently surged.

For the past several years, most U.S. fund managers have considered Venezuela off-limits for investment due to the Maduro regime's political repression and economic crisis. However, there is growing speculation that political changes following President Maduro's extradition to the United States, and increased U.S. involvement in Venezuela's oil resources, could improve the investment environment, including the possibility of Venezuelan debt restructuring.

Charles Myers, Chairman of New York-based consulting firm Signum Global, stated that his team is planning a business trip to Venezuela to assess investment prospects, and that requests from clients to accompany them have increased significantly. Celestino Amore, co-founder of Canaima Capital Management, which has been investing in Venezuelan sovereign bonds for the past five years, said, "This is just the beginning for us and the starting point of a much bigger deal."

WSJ also reported that some expect opportunities to arise in other sectors of Venezuela's economy that declined under the Maduro regime. Ben Cleary, partner at Sydney-based Tribeca Investment Partners, revealed that his firm is interested in Venezuela's undeveloped mineral resources and plans to dispatch dedicated personnel for several months to conduct direct evaluations.

However, WSJ cautioned that "if Venezuela's domestic political instability or conflicts with the United States persist, reconstruction efforts could be affected." The report also noted that "it could take considerable time to revive the country's aging oil infrastructure, which may make U.S. energy companies reluctant to participate in business." Furthermore, WSJ pointed out that "successfully restructuring Venezuela's large and complex sovereign debt will not be easy."