Mary Anne & Pamela Aden: “Our favorite stock pick for the year ahead is iShares MSCI Mexico Investable Market Index (EWW). It was a good performer in 2012, gaining 34%, and this will likely continue in 2013. Despite the bad PR, Mexico has quietly been playing catch up. As Latin America’s second largest economy, its growth was greater than Brazil’s last year and it’s poised to outperform again this year.
“Higher wages in China have provided a boost to Mexico’s manufacturing sector and exports are expected to surge. Other sectors are also picking up, including oil and gas. Meanwhile, Mexico’s stock market has been one of the world’s top performers and many have wondered why. Stocks lead and the market is telling us that Mexico will likely be an upcoming emerging market winner, so it’s best to get on board.”
- Mary Anne & Pamela Aden, The Aden Forecast
Nicholas Vardy: “Mexico is a country I’ve dubbed the ‘China Next Door’ for its emerging manufacturing prowess. In fact, I think manufacturers setting up in Mexico just might be the most under-reported mega-trend in global investing. While Mexican wages were 237% higher than Chinese wages in 2002, that cost advantage today has shrunk to 15%. Moreover, Mexico’s most obvious advantage is geographic location. Sharing the same time zone and a border with the United States, Mexico’s location is ideal for U.S. companies. And as recently as 10 years ago, most of the factories lining the U.S.-Mexican border were ‘sewing blue jeans and crafting Converse sneakers,’ as one expert put it. Today, Mexican companies design, develop and manufacture some of the most complex products in the aerospace, automotive, medical and electronics sector.
“Unlike China, Mexico allows its currency to ‘float’ in world currency markets. This has resulted in a significant depreciation in the value of the Mexican peso. Americans currently pay 30% more for Chinese products and 40% less for Mexican products, compared to 2007. Since joining NAFTA in 1994, Mexico’s trade with the United States is duty free. Mexico also has international trade agreements with 44 different countries. The enforcement of intellectual property rights in China is a serious problem for Western manufacturers of all stripes.
“Along the U.S. border, the workforce is not only bilingual but bicultural as well. Most university-educated people in Mexico speak English. Meanwhile, Spanish is the most common foreign language taught in U.S. schools. Mexican and U.S. cultures are both western and share more similarities than North American and Asian cultures do. Even while much of the global economy struggles, Mexico has been doing just fine, thank you. In early 2012, Mexico’s Gross Domestic Product (GDP) grew at an annual rate of 4.6%. Mexican car exports to the United States have now exceeded those from Japan, Korea and Germany. Some analysts argue that Mexico is likely to become Latin America’s greatest economic success story, pushing Brazil out of the spotlight. Nomura, an investment bank, has predicted that ‘Mexico [will] surpass Brazil to become the region’s largest economy within the next 10 years.’ The iShares Mexico Investable Market Index Fund (EWW) replicates the MSCI Mexico Investable Market index and consists of stocks traded primarily on the Mexican Stock Exchange. So buy EWW and place your stop at $53.00.”
Nicholas Vardy, Bull Market Alert, via TheStockAdvisors.com
Jim Powell: “An emerging nation that is starting to make exceptional progress is Mexico, but few U.S. investors have yet to notice. The country is undergoing a manufacturing revolution and already exports more products to the world than the rest of Latin America combined. For most investors, iShares MSCI Mexico Investible Market Index Fund (EWW) is the best way to benefit from the Mexican transformación. It is our top pick for 2013. Here is why Mexico is becoming so successful, and why I urge you to take a position to benefit from the country’s progress: Few countries in the world have made a greater commitment to promoting trade than Mexico. The government signed free trade agreements with 44 other nations, which is more than twice as many as China and four times more than Brazil. Mexico shares a 2,000 mile border with the U.S. which gives the country a big advantage over its competitors. Although China can still make most products at a lower cost, the advantage usually disappears when transportation expenses are included. Mexico’s close proximity to its markets also means it can quickly respond to the changing needs of its customers. Mexico is in the same time zone as most of its customers; instead of waiting until the middle of the night or the next day to call a supplier in China or India, a U.S. customer can pick up the phone and do business right away with Mexico. Mexico also has a young, well-educated and energetic workforce. Over half the population is under 29. Both Japan and China have aging populations that won’t be able to support their high economic growth rates much longer. The safest, most diversified way to share in the development of Mexico is to buy the iShares MSCI Mexico Investible Market Index Fund, an exchange-trade fund that holds positions in the country’s must successful companies.”
Jim Powell, Global Changes & Opportunities Report, via TheStockAdvisors.com