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Foreign Investors Pour $80 Billion into Mexico Stocks & Bonds

24 March, 2013

Reuters reports that foreign investors are buying record amounts of Mexican stocks and bonds,totaling more than $80 billion in the fourth quarter alone. According to the central bank,this is nearly five times more than the amount of foreign investment dollars that went into Brazil during the same period.

“Foreign portfolio investment inflows doubled in 2012 from a year earlier on optimism about reforms promised by Mexico’s new government and solid growth of about double that of Brazil,Latin America’s biggest economy,” writes Reuters. “Investment in both private and public sector assets picked up in the fourth quarter to notch quarterly records for the period since 1995,when the current data series began.”

According to UBS economist Rafael de la Fuente,there has been a substantial increase in money coming into Mexico since the election. In fact,foreign inflows to Mexican stocks and corporate debt vehicles reportedly totaled $10.04 billion for 2012,with the fourth quarter attracting more than half that amount at $5.61 billion,which is also a large increase over the third quarter’s $1.21 billion. In addition,total portfolio investment inflows hit $23.53 billion,while peso-dominated bonds hit more than $14 billion during the fourth quarter alone. By comparison,net portfolio inflows for Brazil were at a mere $16.53 billion in 2012,which dropped from $67.8 billion just two years earlier.

This growth is excellent news for the future of Mexico real estate,with more investors than ever opting to diversify by including tangible assets,such as land,in their portfolios. Also of note,according to the central bank foreign direct investment numbers would have registered at close to an impressive $17 billion for the year,if the $4 billion public offer of shares in Spanish-owned Banco Santander had not caused a reclassification of funds from direct to portfolio investment.