Mexico’s economy and its stock market have been posting strong gains in recent weeks,causing the nation’s treasury department to increase estimates for economic growth in 2014 to at least 4 percent. This beats projected growth for 2013,which remains at around 3.5 percent. In addition,Mexico’s IPC index has risen for seven sessions in a row,causing analysts to predict further gains ahead.
At the same time,the Brazilian market has fallen dramatically as the nation’s industrial output slowed more than expected in early 2013. Mexican stocks,however,are enjoying increased support as economic reforms proposed by the new government and President Enrique Peña Nieto promise to jumpstart the nation’s already strong position.
“Mexico’s growth prospects are attracting investment banks and investors hunting for ways to gain greater exposure to international markets,” writes Elizabeth Malkin for the New York Times. “At the same time,foreign manufacturers are returning to Mexico as a production platform for the recovering American market.”
Namely,global automakers are already investing more than $10 billion in new assembly plants,while local companies are expanding at home and abroad. In addition,Mexico’s stock market has steadily been increasing its annual number of initial public offerings,with Banco Santander holding a $4.13 billion public stock offering of its Mexico subsidiary last September in what was the largest ever IPO in Mexico and came in globally behind only Facebook and Japan Airlines in size for 2012.
Pending market reforms are already playing a role in boosting the nation’s currency,with the peso jumping 2.3 percent against the dollar in April as the currency’s rally quickened following approval of reforms to break up its telecommunications sector and open the industry up to foreign investment.
“Analysts say these reforms,and others in the works,should pave the way for faster growth,” reports The Wall Street Journal. “Mexico’s economy has expanded at an annual pace of 3.9 percent,even as other large emerging markets,including Brazil and South Africa,have seen growth slow.”
In other Mexico market news,the Mexican Unit of BBVA Bancomer has formed a new alliance with major international fund manager Franklin Templeton Investments to offer an emerging markets equity fund,which is expected to attract at least $100 million within the first six months.
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