Mexico Becomes a Hotter Investment than Brazil

President Enrique Peña Nieto has been pushing for economic change, which has encouraged many investors put cash in to Mexico. Now Mexico has become the new hotspot for investors seeking opportunities in Latin America.

Mexican companies have proven themselves to have a better profit profile than those within Brazil, with higher profitability and better margins.

A recent article quoted a research director at Frontier Strategy Group as saying, “Brazil became a lot less attractive in the last year and a half. Mexico has definitely come up as a priority.”

Compared to Mexico’s quickly growing economy, Brazil’s grew only 1 percent last year. Brazil has the largest economy within Latin America, but it has been fighting against high inflation, leaving investors worried that over a potentially low-growth environment.

Experts predict Mexico’s economy will expand approximately 4.5 percent this year. Key fiscal, financial and energy reforms are expected in Mexico this year, and this comprehensive reform process will only deliver higher growth capacity for Mexico.

Mexico, overshadowed by Brazil for years, has secured its place as the new favorite among investors looking to put cash into Latin America.

“A lot of funds are looking into Latin America as sort of a portfolio of opportunities. Brazil became a lot less attractive in the last year and a half,” said in an interview Clinton Carter, director of research at Frontier Strategy Group. “Mexico has definitely come up as a priority.”

Jens Nordvig, global head of currency strategy at Nomura Securities wrote in a recent note “The mood in Mexico is clearly constructive. A lot of faith is being put in the ongoing reform process under President Pena Nieto, including deregulation of key industries.”

“Mexico, on most industries—and we’ve done a fair amount of surveys on this—generally has higher margins and is more profitable than a lot of other emerging markets,” said Carter of Frontier Strategy Group.

Investors have been encouraged by signs that the new Mexican president will continue to push for economic change.