A new article by CNBC is just the latest installment in an ongoing flood of positive news for Mexico,which has reportedly “secured its place as the new favorite among investors looking to put cash into Latin America.” This includes mutual funds,such as the iShares MSCI Mexico Capped exchange traded fund (ETF),which has gained more than 17 percent over the last year.
“The mood in Mexico is clearly constructive,” writes Jens Nordvig,global head of currency strategy at Nomura Securities. “A lot of faith is being put in the ongoing reform process under President Peña Nieto,including deregulation of key industries.”
All signs point to the fact that Mexico’s new president will continue to press for economic change,such as the labor,telecom and education reforms that are already underway. A variety of additional fiscal,financial and energy reforms are expected to follow throughout 2013 and beyond. It’s important to note that certain energy reforms are expected to provide private sector opportunities for Mexico’s state-run petroleum company,PEMEX,which will “be a great boost for the economy.”
According to CNBC,Mexico’s ongoing comprehensive reform process is likely to deliver an even higher growth capacity for Mexico real estate. In addition,the Mexican economy is expected to expand by at least 4.5 percent in 2013.
“Investors are also finding that Mexican companies have a better profit profile,” writes CNBC. “The companies tend to higher profitability and better margins than those in Brazil.”
In fact,in most industries Mexico has higher margins and is more profitable than other emerging markets,such as Brazil,where the economy grew less than one percent in 2012,compared to nearly 4 percent in Mexico. The currency in Brazil is also expected to continue weakening and there remains a sense of uncertainty regarding the government’s policy-making decisions and target rates.