Safe Havens Take Hit in South America as Pandemic Sparks Unrest

For years, it’s been easy for investors to divide South America into two camps. One was the perennial misfits, countries like Argentina, Ecuador and Venezuela, where constant turmoil roiled economies and upended businesses. Then there were the oases of stability, most notably Chile, Colombia and Peru, where drama was minimal and money managers could feel fairly safe.

But suddenly those Andean havens are looking a bit unsettled themselves, and markets aren’t taking it well. Even before the country was cut to junk last week, Colombia’s local bonds were the worst in emerging markets after a clumsy attempt to raise taxes fueled an eruption of street protests. Peru’s currency has been battered as an avowed Marxist took the lead in presidential election polls. Chile’s stock market is the world’s worst performer after the establishment was roundly defeated in a vote to select officials to rewrite the constitution.