Latin America was one of the main beneficiaries of the commodity and credit boom of the last five years. As a result, the region has been hit hard by the collapse in both this year. Emerging markets expert Irwin Greenstein says some Latin markets remain high risk for investors. But Brazil and Mexico should recover strongly when global markets stabilize.

Plunging oil prices and currencies, combined with tight credit markets, have formed a fiscal hurricane sweeping through Mexico, Venezuela, Brazil and Argentina.

Although oil prices rebounded 17% yesterday, a barrel of crude is down 45% from its record high of $147.27 in July.

Many Latin American countries prospered with rising oil prices. They are now in the throes of a crisis that obliterates any oil-premium safeguards for investors — at least for the near-term.

Petro-fascist Hugo Chavez of Venezuela lost some of his bluster.

Venezuela is one of the biggest oil exporters to the US. However, American consumption has been sliding along with the overall U.S economy. The January-April 2008 numbers show a 2.5% drop to 140,000 barrels from all of 2007.

Chavez has cut oil export deals with China and Russia. But it’s too soon to tell how much is flowing to those countries.

Still, if you were in Venezuela’s Caracas stock market you probably didn’t do too horrible compared with the rest of Latin America. It’s down 5.17% over the past three months.

Investors in Brazil’s Bovespa stock market, however, did much worse. It’s down nearly 41% during the past three months — perhaps one of the biggest surprises in Latin American economies.

Fitch Ratings forecast Brazil’s economy to grow by 3.3% next year, down from an earlier prediction of 5.1 percent.

With its rapid drop, the Bovespa certainly did some severe damage to investors caught in the downdraft. But the real question to ask is whether or not it’s time to get back in at today’s discounted prices.

Brazil is among the top energy independent countries in the world, both of fossil fuels and bio-fuels. This shields it from some of the inflationary pressures racking more import-dependent countries.

Also, Brazil’s banks haven’t been ravaged by the mortgage meltdown.

The Bovespa took a hit for two reasons: 1) an overall flight to safety and 2) a related loss of confidence in an oil-producing economy.

How much lower the Bovespa will drop is anyone’s guess. But if you have guts, it may be worth a look.

When it comes to Argentina, investors can still hear the screams from the massive default of 2001. Argentina needs about $12 billion in cash to make it through next year and no one is quite sure where that money will come from.

At least, until recently, Argentina could bank on rising oil prices.

The general lack of confidence in Argentina is clearly reflected it’s stock market, the Argmerv, which is down 37.2% in three months.

Meanwhile, Mexico is getting a double-whammy with big hits to the peso and oil. The Mexican IPC index slumped 28.6% during the last three months. It seems that many investors came up on the wrong side of currency trades.

Of all the Latin American oil producers, Mexico is in pretty good shape. It has low debt and big reserves. Given its trade status with the US, it could be one of the earliest beneficiaries of a US turnaround.