According to Forbes,American investors are quickly buying up mutual funds and exchange traded funds that are focused on emerging markets,especially Mexico. In fact,the flow of investment dollars has hit levels that have not been seen since 2010 over the last few months,with January 2013 numbers rising by more than 40 percent over the full year total for 2012.
Meanwhile,investors are increasingly pulling out of Brazil,which was previously the most popular investment destination in the region. The general consensus is that Mexico real estate offers a much wider variety of opportunities than Brazil,which is experiencing economic difficulties resulting from questionable monetary policies and lower interest rates that have helped to increasing rising inflation.
“Investors prefer Mexico for Latin America exposure,” writes Forbes. “Mexico-focused equity funds have now taken in fresh money for ten weeks in a row.”
Also of note,over the last 12 months,the iShares MSCI Mexico ETF rose 26.91 percent,while the Mexican telecom giant America Movil was up 7.87 percent over the same period. In addition,the Mexican banking sector still has plenty of room to grow,while private sector debt to gross domestic product (GDP) is low.
“Mexico’s economy and its banks are likely to be supported and accelerated by positive demographics,hitting a sweet spot in 2020,” writes Forbes. “Current projections point not only to Mexico showing one of the strongest levels of population growth among major economies,but also the greatest fall in the proportion of young to old,relative to the working age population.”
What this translates to is a substantial increase in available resources and stronger GDP growth. In fact,Mexico’s economy has been doing quite well throughout the recent global economic meltdown,thanks in part to its stable wage growth,especially as compared to the steeply rising wages in China.