3/22/2017 Business Day
Mexico is the most attractive emerging market for investors, based on a range of metrics analysed by Bloomberg including growth, yields and equity valuations. India is the worst.
Mexico’s currency slid and bond yields surged as President Donald Trump was elected in November after lambasting the country for stealing US jobs. Even after an initial sell-off subsided, the 10-year bond yield is still more than a percentage point above where it was before the election. The peso’s real-effective exchange rate is close to a 21-year low, boosting the earnings outlook for exporters.
“Both Mexico’s currency and bonds have been sold too much,” said Akira Takei, who helps oversee the equivalent of $440bn as a fund manager at Asset Management One Company in Tokyo. He said the expectation the dollar would weaken had convinced him to hold a higher proportion of pesos and Mexican government bonds in his portfolio than recommended by the benchmarks he followed.