Global investing news service Money Morning has dubbed investing in Mexico a “100-year opportunity,” citing the evolution of the nation’s government and economy over the last century and the positive repercussions that are already in the pipeline that are stemming from last year’s election of President Enrique Pena Nieto.
“There is quite a bit of long-term upside ahead [in Mexico],” writes Money Morning. “The short term picture looks pretty good,too. The Economist team of forecasters already puts Mexican growth at 3.7 percent in 2013 and 3.9 percent in 2014. Further,the Banco de Mexico has just cut interest rates from 4 percent to 3.5 percent and that should help the economy.”
As a result of Mexico’s booming economy,there are a variety of ways to invest in its markets today. In fact,according to the Financial Times,the market currently trades on a 19 times price to earnings (P/E) ratio. Popular investment options include land banking Mexico real estate,which is how many of the world’s wealthiest people have protected and grown their assets.
Mutual funds and stocks offer a different type of investment opportunity,such as the iShares MSCI Capped Mexico Investible Market exchange traded fund (ETF),which yields a dividend of 1.3 percent and has an impressive market capitalization of $2.3 billion. Since it is an index fund,however,keep in mind that around 17 percent of its capitalization is tied up in America Movil,which belongs to telecom magnate Carlos Slim. The closed-end Mexico Fund is also popular and trades on the New York Stock Exchange as MXF,paying quarterly dividends that amount to a net rate of 10 percent of the fund’s net assets. Finally,Mexico’s Desarrolladora Homex S.a.b. de CV ADR,which trades on the NYSE as HXM,was mentioned in the article as a viable option for investors. This homebuilding company trades on a P/E ratio of 6 and is expected to grow dramatically in the coming months.
“With the Banco de Mexico’s interest rate cut,housing can be expected to flourish in 2013 and Homex should share in the improvement,” writes Money Morning. “The changes going on south of the border make for a great investment opportunity.”