Three Good Ways to Invest in Mexico
Mexico is the 14th largest nation in the world by land mass. Its 115 million people place Mexico in 11th place in the world by population. Mexico has a GDP of over a trillion dollars. When the cost of living in Mexico is calculated in, the GDP of Mexico according to purchasing power parity is just under $1.7 Trillion. As its economy grows there are at least three good ways to invest in Mexico.
The first is to focus on Mexican companies through the Mexican stock market. The private sector is increasingly dominant in Mexican society and seaports, railroads, electric generation, natural gas distribution, telecommunications, and airports are all increasingly in the private sector and are investment opportunities.
The second of our three good ways to invest in Mexico is to purchase stock Mexican companies listed on American exchanges. This route may be the most comfortable for American investors.
The third of our three good ways to invest in Mexico is to do it directly. Foreigners can own real estate in large parts of Mexico. Mining is attractive as the country has rich mineral resources. For those wishing to retire in the sun, property in Mexico is cheaper than in the USA and the cost of living is lower. To a large degree investing in Mexico is like investing in the rest of Latin America. See our article, Invest in Middle Class Growth in Latin America. Now, here is a bit more about three good ways to invest in Mexico.
Investing in Mexico via Mexican Stocks
One can buy stocks on the Bolsa Mexicana de Valores, BMV, the Mexican stock market. It is the only Mexican stock exchange and is located in the capital, Mexico City. The stocks listed have a total capitalization in excess of $400 Billion calculated in US dollars although stocks are denominated in and traded in Mexican pesos. The BMV is second to Bovespa, the Brazilian exchange, in Latin America in size. Here are a few representative listings of our first of three good ways to invest in Mexico:
América Móvil: Telecom
Grupo Aeroportuario del Pacifico: Airports
Grupo Bimbo: Food
Grupo Modelo: Beverage
Grupo Financiero Santander: Retail and Private Banking
TV Azteca: Television, Media
Televisa: Television, Media
Mexican Stocks as ADR’s
For many American investors it is probably easier to look for Mexican stocks listed as American Depository Receipts (ADR’s) on US stock exchanges. There are currently 89 Mexican companies available as ADR’s. These stocks represent a wide range of industries and investment opportunities. Although there are many US companies that do business in Mexico, the portion of their total business may be small. So as not to dilute the Mexican part of the investment opportunity, the second of our three good ways to invest in Mexico is to stick with Mexican companies but those listed as ADR’s. These stocks commonly need to provide the same level of information that American stocks do for the NASDAQ or NYSE. This provides the investor with a sound basis for fundamental analysis when choosing foreign stocks.
Investing and Doing Business Directly in Mexico
An American investor can do business in Mexico. He or she can own property. However, the job is easier if the investor speaks Spanish and has a good sense of the local business culture. Many investors choose the property route simply because they can buy, give the work to a property management company, and collect rental payments while devoting their time to walking on the beach. This may well be the best of our three good ways to invest in Mexico if you are set to retire. Read Foreign Real Estate Investments for more insights.
Therefore keep the words of this covenant, and do them, that you may prosper in all that you do. – Deuteronomy 29:9
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