With countries around the world still struggling from the financial crisis that took investors by storm in 2008, many are finding it tough to decide where to get back into the market. As a result, Business Insider reports, “emerging markets have become a popular destination for risk-tolerant investors looking for lucrative opportunities.”
However, it’s important to remember that not all emerging markets are equal in the opportunities they present. Brazil has long dominated the conversation in South America, thanks to good demographics and a strong relationship with China during its best years. But recently, Mexico has been stealing the spotlight from Brazil as the best place in the region for investment dollars.
For one thing, Mexico is on target to outperform Brazil in 2012 in economic growth. Since its peak in early 2011, Brazil has experienced a contracting GDP, while Mexico has grown more than 3 percent over the last 12 months and experienced a striking growth rate of more than 4.6 percent during the first quarter of 2012 alone.
In addition, Mexico real estate is positioned geographically close to the United States and benefits from an excellent relationship with what is still the world’s largest economy. According to Business Insider, this includes exporting more cars to the U.S. than Germany, Japan or Korea. In addition, Honda, Mazda and Nissan have all announced plans to build new factories in Mexico over the coming months. Brazil, on the other hand, has close ties with China, which has experienced slower growth this year.
Finally, Mexico’s private sector debt-to-GDP is around 20 percent, compared to Brazil at nearly 50 percent. In addition, Mexico’s inflation is quite manageable and has greatly improved its trade policies and opened up its economy. All of this has worked to make Mexico a popular destination for foreign investment dollars in recent years, increasing its appeal on an international level.
According to Business Insider, there are two ETFs investors should consider if they are interested in tapping into Mexico’s growing economy: The iShares MSCI Mexico Investable Market Index Fund and the ProShares Ultra MSCI Mexico Investable Market.