Views from the Ground: Mexico

Views from the Ground: Mexico

A recent trip to Mexico helped us reassess our views on the country within the current global economic landscape and why we believe the present environment is an attractive opportunity for active stock-pickers.

The views and information discussed are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are opinions and may not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell securities or investment vehicles

Definitions 

Basis Point (bp) is a unit that is equal to 1/100th of 1% and is used to denote the change in the value or rate of a financial instrument. Big Mac Index is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries. Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. Consumer Price Index is an index of the variation in prices paid by typical consumers for retail goods and other items. Key rate is the specific interest rate that determines bank lending rates andthe cost of credit for borrowers. MSCI Emerging Markets (EM) Index captures large and mid cap representation across 24 EM countries. MSCI Mexico Index is designed to measure the performance of the large and mid cap segments of the Mexican market. Price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its earnings per share. United States-Mexico-Canada Agreement (USMCA) which substituted the North America Free Trade Agreement (NAFTA) is a mutually beneficial win for North American workers, farmers, ranchers, and businesses.

Investment Considerations — There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including the potential of loss of principal.

Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political, legal and economic structures in these country may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments.