Stick with Mexican stocks

Mexico still has plenty of problems, but the country is moving in the right direction.

Mexico's president Enrique Pea Nieto has won worldwide praise for reforms designed to boost the economy's growth potential. But he's unpopular at home, where the "interlinked problems of violent crime and corruption" are the main concerns, saysThe Economist.

You can see why. Drug traffickers killed 43 students in the southern state of Guerrero, after police kidnapped them and handed them over.

And it seems that one of the firms in a consortium hoping to build a high-speed rail line owns a mansion that is the Pea family's private residence.

These events are a reminder that economic reform won't be enough if criminality and corruption continue to undermine growth.

Pea needs to "pursue reform of Mexico's police forces with the vigour, commitment and ingenuity he has brought to opening its energy and telecommunications markets", says Bloombergview.com. It won't be easy, but Mexico has come a long way recently and this should be merely a setback, says Dimitra DeFotis in Barron's.

Remember that the government "shattered a 75-year government energy monopoly" this year, while financial reforms should bolster transparency and property rights. Growth is rising, inflation is falling and equity valuations remain reasonable. Stick with Mexican stocks.

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