Mexico has become one of the world’s most talked about emerging markets,ousting Brazil as the number one choice in Latin America for investors and providing what NASDAQ calls a “safe haven” for investors.
“The great Bill Gross of PIMCO recommended buying Mexican sovereign debt earlier this summer,” writes NASDAQ. “Jim O’Neill of Goldman Sachs revealed how his new MIST countries – Mexico,Indonesia,South Korea,Turkey – are stomping the tired old BRICs in market returns. The Financial Times gushed a few days ago over new production records for Mexico’s auto industry.”
Although exciting,as NASDAQ is quick to point out,the rise of Mexico on the world investment stage is “old news to informed emerging markets investors.” The fact is that Mexico’s bond market has experienced “epic gains” over the past two years,with respect to yields on 10-year peso-dominated debt.
Mexico still has the capacity to significantly stimulate its economy and enjoys an excellent geographical location next to the U.S.,which is still the world’s largest economy. Also of note,the recent election of incoming president Enrique Peña Nieto is widely expected to make Mexico real estate increasingly attractive for direct foreign investment,thanks to the pro-market reforms that were an integral part of his election.
In addition,the widely respected Zacks investment research firm has also shown a spotlight on Mexico,citing a recent report by Nomura predicting, “Mexico will likely overtake Brazil as Latin America’s largest economy.”
In particular,Zacks is encouraging investors to consider the iShares MSCI Mexico Investable Market Index,an ETF that consists of stocks that are traded primarily on the Mexican Stock Exchange. Since its launch in 1996,the fund has accumulated more than $1.2 billion in assets under management. The fund’s top sectors are consumer staples,telecom and materials.
“Growing consumer demand in the country suggests that the fund will benefit from its heavy exposure to consumer staples and telecom sectors,” writes Zacks. “The ETF has gone up 17.02 percent year-to-date.”