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Research Magazine Examines Mexico’s Resilient Stock Market

13 September, 2012

A recent story by senior editor Kenneth Silber at Research magazine discusses the consistent tendency for Mexico’s stock market to weather and triumph,despite economic and financial challenges. Since NAFTA went into effect in 1994,authorities in Mexico have sought to capitalize on the proximity of their country to the U.S. Over the years,Mexico has attracted many global investors thanks to its unusual identity as both a leader among emerging markets and a member of a huge trading bloc.

According to Silber,Goldman Sachs has called Mexico one of the N-11; a group of 11 nations willing to follow the four BRIC countries (Brazil,Russia,India and China) in adopting the roles of global economic expansion. Mexico,along with South Korea,is more developed than most of the N-11,a diverse group including frontier markets such as Nigeria and Bangladesh,but Mexico is included in the group with the highest potential growth.

According to Nasdaq.com,Mexican Finance Minister Ernesto Cordero expected nomination of Bank of Mexico Governor Agustin Carstens to replace Dominique Strauss-Kahn as head of the International Monetary Fund is a sure sign of Mexico as a strong emerging market “The idea of the IMF being headed by an official from an emerging market has been increasingly discussed,given the growing importance of those markets in the world economy. Strauss-Kahn's unexpected exit has given the matter more immediacy...”

Mexico holds zero debt with the IMF and has a credit line of over 70 billion US. Although Mexico is still considered an emerging market,it has exemplified substantial financial growth and fiscal responsibility to which the IMF holds its standards for inclusion in policy decision making positions. 

Mexico's public debt recently stood at just over 40 percent of GDP,compared with an equivalent U.S. 60 percent. When Standard & Poor's changed to a negative outlook on U.S. debt in April,Mexico's financial markets took it in stride,as analysts noted the contrast with Mexico's own fiscal situation is well to do. The Bolsa Mexicana de Valores,the CPI increased 6.7% year to date,compared to the Dow Jones industrial average gain of 5%. Since December 2009,this was above the highest point before the crisis. In late 2010,the CPI hit a record 38,550 before falling slightly by about 37,000 in the second quarter of 2011.

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