While many markets have slid in 2008, Mexico's has outperformed. The benchmark IPC index is up by over 6% this year, and has gained 10% in dollar terms.
This is partly due to the market catching up with other emerging markets after a weak performance last year, while recent economic data have been better than expected. Pension funds will now be permitted to double their investments in the equity market to 30% of funds under management.
Still, this fiesta "could yet slow to a shuffle" as economic realities reassert themselves, as Lex points out in the FT. The market is vulnerable to a slide in commodity prices, while 80% of Mexico's exports, which in turn represent about 30% of GDP, go to the US, according to Citigroup.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Mexico is the emerging market most exposed to the US and "we would be surprised" if Mexico's market kept performing so strongly "just as US economic data starts to deteriorate", says Morgan Stanley, which points out that the market remains closely correlated with the S&P 500; the latter explains 65% of the MSCI Mexico index's performance.
What's more, the market is on a forward p/e of 14.5, a hefty premium to emerging markets in general. The market's recent outperformance "is not a trend".
-
What is the 25x retirement rule and does it work?The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
Is it different this time for Japanese stocks?Analysis Nikkei 225 Index has jumped 19.8% this year, and there are signs the rally could continue.
-
Seoul attempts to close the “Korea discount” for stocksNews South Korean stocks suffer from the “Korea discount” – with the country still classified as an emerging market, investors are reluctant to pay a premium.
-
Whisper it – but perhaps the UK stockmarket deserves to be cheapSponsored The UK stockmarket is historically undervalued compared to others. But there are good reasons for that, says Max King – and investors may well be right to shun it.
-
Index firms write off Russian stocksNews Russian stocks will be removed from MSCI’s main emerging markets index at a price that is effectively zero.
-
An end to investing in RussiaNews Foreign investors have abandoned Russian markets - and index compiler MSCI could remove it altogether from its stock and bond benchmarks.
-
2021: a year to forget for investors in emerging market stocksNews Emerging market stocks have fallen from favour with international investors, with the MSCI Emerging Markets index down by more than 4% since the start of the year.
-
Can Latin America's economies recover from the pandemic?News Few places have suffered as much from the Covid-19 pandemic as Latin America. A sustained commodity rally could help.
-
Emerging markets set to bounce – and these eight funds will profitTips Many developing countries were knocked sideways by Covid-19. But they are now ready to rebound. David Stevenson picks the eight best emerging market funds to buy now.
