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Investors and Money Managers Cash in on Mexico

08 December, 2013

Mexico is officially on the radar for investors and money managers worldwide, who have been cashing in on the many opportunities presented by Latin America’s second largest economy. For the long term, Mexico promises to provide an environment that is ripe for investment and delivers huge returns on everything from real estate to investment banking and the stock market.

“Foreign direct investment (FDI) in Mexico nearly quadrupled, reaching $18.29 billion in the April-June period [of 2013],” writes Reuters. “The figure was nearly four times above the $5.56 billion recorded in the prior quarter.”

In addition, Mexico made the cut on Bloomberg Businessweek’s recent list of “Where to Invest in 2013,” which was put together by eight of the world’s leading money managers. These mutual fund investors have consistently outperformed around 90 percent of their peers over the last three to five years and now they are keen to buy in to the upward momentum of this dynamic emerging market. 

“Countries with strong balance sheets and ample policy flexibility, such as Mexico, should outperform,” writes Bloomberg.

In addition,Mexico is now ranked as one of the top 50 nations on the World Bank’s Ease of Doing Business Index, thanks in part to the safety and accessibility of the nation’s many manufacturing and tourist hotspots. This has also helped to attract the attention of Brazilian banking giant Itaú BBA, which already has more than $1.2 billion in assets under management, and will open up investment banking operations in Mexico by January of 2014. According to Alberto Mulas, who will oversee the new initiative, Itaú will enter the retail banking sector and also could get involved in private hospitals, oil and gas, and even successful Mexican cinema chain Cinepolis, which is also expanding internationally.

“Mexico is having an electric year on the financial markets as well as being in the throes of some serious structural reforms designed to pull in billions of dollars in investment, especially in the energy sector,” writes the Financial Times. 

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Another factor that is boosting Mexico’s investment potential – not to mention returns – is its close proximity to the U.S. and Canada. Today, around 80 percent of its exports go to the U.S. and Mexico also receives a large amount of investment dollars from its neighbor to the north. Investors are attracted to Mexico’s free markets and emerging economy, which has already shown its ability to return huge profits on investments in its major sectors.

In 2012 the Mexican Stock Exchange’s Mexican Bolsa IPC Index gained 18 percent, and in February of 2013 respected New York Times columnist Thomas Friedman predicted that Mexico will emerge as the “dominant economic power in the 21st century.” There are a wide variety of investment vehicles available today, including equity funds, bonds and emerging market funds, which have already demonstrated the capacity for significant growth potential.

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Topics: Investment