Skip to content

International Investing – Mexico

October 3, 2013

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

Mexico

When people hear “Mexico,” the first few thoughts that come to mind may be negative. Drug wars, cartels, corruption, and overall chaos are some of the more common ideas and connotations that come to mind. While these, unfortunately, do describe some of what is happening in Mexico, if investment research were to stop at that point, it would not reveal the whole story. Mexico is the world’s 13th largest economy, and is forecasted by both Goldman Sachs and PriceWaterhouseCoopers (PWC) to rise to the world’s 5th or 7th largest economy by 2050 respectively.

Some of the more favorable reasons and developments that could make Mexico an intriguing international investment opportunity are as follows. Mexico actually ranks higher in the “Doing Business 2013” publication from the World Bank than Brazil, China, or India. Foreign investment has been heavily courted by the last few administrations in the form of investment protection agreements and tax treaties. Last but not least, Mexico has several favorable demographic trends that are helping it to prepare for sustained economic growth – the average age is 26 years old, and the university system graduates 115,000 engineers every year.

When looking at investing in Mexico, there are two primary ways to go about it – ADRs or direct purchases. An ADR is basically a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps to cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from Mexican stock exchanges if your broker offers those services to its retail investor base (you and me).

Some of the largest ADRs that are available for investment in Mexico include America Movil (mobile telecommunication), Cemex (construction materials, and Coca-Cola Femsa (beverages). Additionally, the potential “opening up” of the oil/gas industry in Mexico could potentially lead to very lucrative opportunities in this field. Some of the better- known Mexican ETFs include iShares MSCI Mexico Investable Market Index Fund (EWW), ProShares Ultra MSCI Mexico Investable Market (UMX), and ProShares UltraShort MSCI Mexico Investable Market (SMK).

As always, I have attached some links with more information

Happy Reading!
http://www.latia.org/index.php/why-invest-in-mexico
http://etf.about.com/od/foreignetfs/a/Invest-In-Mexico-With-A-Mexican-Etf.htm
http://www.forbes.com/sites/kenrapoza/2012/07/10/sorry-brazil-investors-prefer-mexico/
http://moneymorning.com/2013/07/31/the-best-sectors-for-investing-in-mexico-plus-a-few-to-watch/
http://seekingalpha.com/article/170575-complete-list-of-mexican-adrs
http://etfdb.com/type/region/latin-america/mexico/

Advertisements

From → Discussions

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: