EWW: Investing In Mexico? There Are Some Possibilities
Mexico offers strong equity returns, but significant political, economic, and security risks require careful consideration before investing. The MSCI Mexico Index and iShares MSCI Mexico ETF outperform the S&P 500 in returns, but both carry much higher volatility and weaker risk-adjusted metrics. I rate EWW as a Hold due to its high volatility; it's suitable only for investors who can stomach large swings for potential outperformance.
EWW: Mexico Fades From Tariff Spotlight
EWW offers broad exposure to Mexico's stock market, but is highly concentrated in a few sectors and top-heavy in holdings. Mexico's macro outlook is clouded by US tariffs, political uncertainty, and heavy reliance on US trade and remittances. Recent performance is driven more by speculation than fundamentals, with technicals signaling potential for significant downside risk.
EWW: Mexican Stocks Have Provided Impressive Long-Term Returns
The Mexican stock market, as represented by EWW, has managed to beat the S&P 500 by almost 50 percent over the past 25 years. Mexico's economy has very significant structural advantages, mainly resulting from proximity to the U.S. EWW's holdings tend to be very high-quality businesses, and I believe that the ETF is structured better than many other single-country emerging market funds.
US stocks today: Wall Street trims losses as Trump delays Mexico tariffs for a month
US stocks staged a partial recovery on Monday after initially plunging on fresh tariff concerns. The Dow Jones Industrial Average rebounded from a steep intraday drop after President Donald Trump announced a temporary halt to tariffs on Mexican goods.
EWW: Uncertainty Priced In
Political and macro uncertainties have reduced EWW's EPS growth estimates and price targets, reflecting concerns about future prospects. EWW trades at historically low valuations with a 9.3x PE on YE25 estimates, suggesting any positive news could trigger a rally. I upgrade EWW to Hold due to discounted valuations but caution against Trump tariff threats that could severely impact Mexico's economy.
EWW: If History Repeats, Mexico Should Start Rallying This Week
Mexico's stock market struggled in 2024, with the iShares MSCI Mexico ETF dropping more than 25%. Historical parallels suggest Mexican stocks may rebound following President-elect Trump's inauguration, similar to their recovery in 2017. Mexico benefits from reshoring trends, with increased foreign direct investment in manufacturing, logistics, and technology services.
EWW: Potentially A Winner In The Next 4 Years
Investing in Mexico looks promising with iShares MSCI Mexico ETF, offering focused access to Mexican equities with a competitive 0.50% expense ratio. The EWW ETF's top five holdings, including Banorte and Walmart de Mexico, make up over 40% of assets, providing direct exposure but potential volatility. EWW's unique sector allocation, with a strong consumer staples focus, offers defensive qualities and stability compared to broader Latin American ETFs.
EWW: Buying Mexican Equities Was A Mistake I Made In 2024 (Rating Downgrade)
Evaluating the iShares MSCI Mexico ETF as a potential investment, focusing on its objective to track Mexican equities. Reflecting on the poor performance, I downgrade EWW to "Hold" due to missed growth expectations and market underperformance. The potential for steep tariffs, a declining peso, and weak M&A activity in-country all suggest to me that being bullish here is too optimistic.
Remaining Cautious On Mexico And iShares MSCI Mexico ETF
Political risk in Mexico has been exacerbated by the dominance of the Morena Party control and controversial constitutional reforms. Foreign direct investment (FDI) in Mexico is declining. Drug cartel violence and organized crime intrusion into the normal economy is disruptive to supply chains and public safety.
EWW: Reduce On Political Risk
Downgraded from Buy to Sell due to further political risks from constitutional "reform" and a potential second Trump term. The Mexican market has seen a 10% weaker Peso and a 15% decline in the EWW during political uncertainty that can persist in the next 5 months. EWW's valuation appears cheap post-sell-off at 11x PE, but analysts' downgrades are likely on weaker FX and increased country risk as we head into the 2Q24 earnings.
EWW: Mexican Election Sell Off An Overreaction
Claudia Sheinbaum secured over 60% of the vote. The scale of the victory rattled markets as investors worry about sweeping reforms. Election sell-offs are often a buying opportunity.
EWW: A Potential Trajectory After Mexican Elections (Technical Analysis)
The iShares MSCI Mexico ETF is in a tizzy amid the Mexican election results. Many believe Mexico's new administration will restrict the private markets. However, policy implementation and rhetoric are often different phenomena. Mexico's salient economic data is robust and scope exists for higher debt levels to stimulate GDP growth. This could benefit EWW ETF.
