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How to Invest in Mexico’s Expanding Economy

10 March, 2016

Now Is The Time To Buy Mexican Stocks

Earlier this week, Zacks Equity Research featured Mexico’s Grupo Aeroportuario del Sureste, or ASUR (ASR) as a recommended stock, along with the iShares MSCI Mexico capped ETF (EWW), at the same time that InvestorPlace published a piece recommending Mexico’s Volaris Aviation Holding Company (VLRS) as a “Top Stock” for investment right now.

“Mexico offers attractive investment opportunities in energy and other key sectors, and has the capacity to be a global trade hub,” stated Mexican President Enrique Peña Nieto in a special to Gulf News. “Over the last 30 years, Mexico has transformed itself to become one of the world’s most open economies.” 

According to Nasdaq, investors who overlook Mexico are “foolish” since it is Latin America’s second-largest economy, and definitely its most robust. In addition, Mexico managed to grow its GDP by more than 2.5 percent in 2015 and the nation’s services sector grew by an astounding 3.3 percent during the same period.

“The Mexican inflation rate is well below the Central Bank target of 3 percent and domestic consumer demand remains buoyant,” wrote Nasdaq. “Analysts expect the Mexican economy to grow by [at least] another 2.2 percent in 2016.”

Since Mexican stocks have experienced a decent selloff over the last year or so, they are now offered at a really nice price. For example, the iShares Mexico ETF is now trading at near six-year lows, but with the Mexican “growth story still intact,” now is definitely the time to buy.

Ways To Invest In Mexico

Investors can buy a Mexican company directly, decide to get portfolio exposure to Mexico by investing in U.S. companies like Home Depot (HD) that do business in Mexico, or buy into the iShares Mexico real estate investment trust, Some Mexican companies trade on the American stock exchanges, so you can go directly to the source and actually invest in some of Mexico’s largest publicly-traded companies.

“Another interesting way to play Mexico’s improving economy is through tourism,” wrote Nasdaq. “For the first 11 months of 2015, international tourism rose 14.2 percent year over year.”

With total passenger traffic in 2015 rising by 12.9 percent and domestic air traffic rising by more than 13.5 percent during the same period,Mexico’s airports are a great way to invest in the tourism sector. In addition to ASUR, there are two other publicly traded airport firms in Mexico, each with different segments and airports throughout the country.

“Volaris Aviation Holding Company is essentially the Spirit Airlines of Mexico,” wrote InvestorPlace. “Just last week, Volaris reported fourth-quarter net income of 38 cents per share on $296 million in revenue.”

For 2015, Volaris reported total operating revenues of more than $1.06 billion, and earnings per share of $1.42.

Mexico is also a key trading partner with the U.S. and is the 10th largest oil producer in the world. Other bright spots in Mexico’s economy include projected GDP growth of up to 3.2 percent in 2016.

“Our current network of free trade agreements provides us with preferential access to 52 countries with 1.3 billion potential customers,” revealed Peña Nieto. “These commercial advantages, among many other competitive advantages, have turned the country into an attractive destination for foreign direct investment (FDI).”

Mexico’s economic growth will be driven largely by growing property development and construction activity, increased business investment and accelerating manufacturing activity. This has prompted economists to predict that Mexico’s labor market, household income and consumer spending will grow.

“Over the last three years,Mexico has received the historic amount of more than 90 billion in FDI; a clear sign of the world’s trust in the country,” stated Peña Nieto.

Want to know more about investing in Mexico?

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Topics: Economy Investment Mexico Learn How

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