By Jeffrey Hodgson

HONG KONG (Reuters) - Investors betting on Latin America should be overweight Brazil, the region's top economy, at the expense of exposure to Argentina, Mexico and Chile, a Credit Agricole Asset Management (CAAM) executive said on Monday.

They should also be overweight the region's energy and telecom firms, while limiting exposure to consumer discretionary and IT plays, added Stephane Mauppin-Higashino, a product specialist with the 481.7 billion euro fund house. Brazil's Bovespa index .BVSP hit a record high last month after rating agency Standard & Poor's lifted Brazil's credit rating in April to much-coveted investment-grade status.

Mauppin-Higashino, who works closely with the team managing the firm's Lipper-award winning Latin America equities fund, said the upgrade had increased the long-term earnings potential of Brazilian firms.

"That new investment grade status will unleash some potential further rerating," he told Reuters in an interview in Hong Kong.

"It will reduce further the cost of capital on a more sustainable basis. It will attract additional flows to the country by the reduction of the risk ... that will add to the potential growth."

By contrast, he said the more mature Chilean market lacked the "economic dynamism" of Brazil and Mexico's fortunes are closely tied to the flagging U.S. economy.

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The fund manager is particularly pessimistic about Argentina, where many Wall Street investors are concerned about high inflation and interventionist policies. Equity index provider MSCI Barra (MXB.N: Quote, Profile, Research) warned this month it could downgrade Argentina by reclassifying it to frontier from emerging market status.