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.
EWW ETF: May Not Be Prudent To Buy The Dip
iShares MSCI Mexico ETF has lost close to 9% of its value on a YTD basis, underperforming global markets. Recent election results and the ruling Morena party gaining a supermajority in the house may have negative implications for Mexican stocks. Mexico's high crime and corruption rates may limit nearshoring progress, and a potential shift towards populist programs, raise concerns about the fiscal position.
Mexico ETFs face worst day in 4 years after ruling party's election win spooks investors
Exchange-traded funds that track Mexican equities were on track to suffer their biggest daily decline in nearly four years on Monday, after Claudia Sheinbaum's victory in Mexico's presidential election sparked investor concerns that her party's landslide win could lead to constitutional changes.
