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Japanese Investors Interested in Mexico's Peso

13 September, 2012

According to a recent report by the Wall Street Journal,Japanese investors are becoming increasingly interested in Mexico's peso due in part to the country's strong economy and stable government policies. Despite the recent earthquake in Japan,many of the country's investors still have plenty of money to invest,and they are looking beyond Japan's lower-yield investment vehicles in search of better deals overseas.

Japanese investors are particularly attracted to Mexico's solid growth profile,which is closely tied to its economic relationship with the US and favorable government economic policies. "We are talking to our investors in Japan - we keep telling them to look at Mexico as an investment source," said Tony Volpon,head of emerging market research Americas at Nomura Securities. "We are seeing a rising flow into Mexico; it's still modest,but it's one of the things that is growing very rapidly." 

He went on to say that over the last few months along,many Japanese retail clients have been increasing the amount they are investing in pesos by purchasing local currency,investment grade debt and foreign currency denominated investment trusts,known as Toshin. Mexico is also attracting Japanese institutional investors,who are attracted to the peso's higher yield and future potential compared to the US dollar. 

According to Brown Brothers Harriman's Murata,Japanese payments for financial accounts showed more than JPY872 billion from Japan into Mexico over the first three quarters of 2010. Also of note,Japanese life insurance companies,which have more than JPY150 trillion in assets under management,are expected to increase the amount of money they will invest in Mexican bonds,according to a Wall Street Journal source at a prominent Japanese. Furthermore,purchases by Japanese individual investors of the peso-dominated Uridashi bonds have increased by JPY1.3 billion from November of 2010 to March of 2011.

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