The global investment community is keeping a close eye on the onslaught of major reforms that have been tackled in Mexico since President Enrique Peña Nieto took office last December. He has already passed landmark education reform with the support of congress and is working diligently to open up the nation’s telecommunications and broadcast markets.
“Mexico is poised to take on a few of the country’s biggest monopolies and moguls by enacting new legislation,” writes Fortune.
Later in 2013,Peña Nieto plans to increase tax revenues and open up the state-owned energy sector,moves that are expected to encourage healthy growth and to bolster Mexico’s already thriving economy. In addition,Standard & Poor’s upgraded the outlook for Mexico’s sovereign credit rating in early March of 2013,moving it up from “Positive” to “Stable.” This prompted the peso to hit an 18-month high against the U.S. dollar and signals a possible upgrade over the course of the next year and a half.
“Some of this appreciation is being driven by strong foreign investment flows into Mexico,” writes Morningstar. “The Mexican central bank reported that in February,foreign investors poured a record $80 billion into the nation’s stocks and bonds,almost five times more than flows into Brazilian securities over that same span.”
The iShares MSCI Mexico Capped (EWW) is a popular cap-weighted emerging market equity index that allows investors to enjoy direct and diverse exposure to Mexico’s stock market. In addition,it provides exposure to both the growing middle class in Mexico real estate,and also to large and profitable consumer firms.
“Other near and medium term drivers for growth include a recovering U.S. economy,the return of some manufacturing previously lost to China as,Chinese competitiveness begins to suffer thanks to wage inflation,and Mexico’s young population,” writes Morningstar.