February saw the BlackRock Latin American Investment Trust gaining a share price increase of 9.5 percent thanks to a stronger currency in Mexico,reported the Financial Times Adviser. According to BlackRock investment manager Will Landers,the materials sector was one of the strongest performing sectors last month,with iron ore increasing by 14 percent.
“The largest contributor to performance was Mexican cement stock Cemex,which benefited from strength in the Mexican peso,as well as the strong move in materials during the month,” stated Landers.
According to Financial Times Adviser,the BlackRock Latin American Investment Trust’s management team moved its copper exposure from Southern Copper to Grupo Mexico,which is expected to benefit from Mexico’s stronger currency. The team reportedly also rotated some financial exposure in Mexico from Gentera to Grupo Financiero Banorte after Mexico’s recent surprise rate hike.
“The team entered March continuing to prefer Mexico over Brazil,pointing to the recovery of Mexico’s domestic economy and the moves by Banco de Mexico to increase rates,” wrote Financial Times Adviser. “The portfolio has a 42.6 percent exposure to Mexico.”
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BlackRock isn’t the only big financial institution betting on Mexico recently. In fact,according to JP Morgan Asset Management,Mexico has edged out Brazil to enter the so-called “Fragile Five;” a group of the world’s top emerging markets.
“There are reasons to believe that Mexico could be perhaps the most reliable Latin American investment destination in 2016,” wrote ETFtrends.com. “The government has been proactive in hedging its oil revenues,which provides support for fiscal spending.”
There was also strong consumer spending in Mexico during the second half of 2015,while remittances from Mexicans working in the U.S. have also been robust and close ties to the U.S. have provided another economic boost. The industrial sector in Mexico has added jobs thanks to increased activity in the automobile and aerospace industries,while structural and political reforms enacted by the Mexican government have helped attract a steady stream of foreign investment dollars,reported REIT.com.
“The reforms have also had a positive impact on the commercial real estate market [in Mexico],including the development of Mexico’s REIT’s,known as fibras.”
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