Foreign investors prefer Mexico over India: Bloomberg
22 Mar 2017
US President Ronald Trump may not have a liking for Mexicans, but Mexico is the most attractive emerging market for investors, according to a Bloomberg analysis, which also found India the least attractive.
Mexico's attractiveness is based on a range of parameters, including growth, yields and equity valuations metrics and not on country's policies alone, says the report.
The low valuation of the peso, whose real-effective exchange rate is now close to a 21-year low, boosts earnings outlook for exporters.
Mexico saw its currency slide and bond yields surge as President Donald Trump was elected in November after lambasting the country for stealing US jobs. Even after an initial sell-off subsided, 10-year bond yield is still more than a percentage point above where it was before the election
India, with its firmer rupee, on the other hand, is the least attractive for foreign investors, says the Bloomberg report.
''Both Mexico's currency and bonds have been sold too much,'' the report quoted Akira Takei, a fund manager at Asset Management One Co in Tokyo, a $440 billion fund, as saying.
Investors are holding on to Peso bonds on expectations that the dollar will weaken further.
Analysts have raised the fourth-quarter peso forecast by almost 5 per cent to 20.50 per dollar since February as Mexico's currency retraced some of the declines that started in November.
India is the least attractive developing nation for investors due to its relatively expensive stocks, bonds and currency.
Also, according to analysts, while new Goods and Services Tax may be a great thing in the medium term, it could hurt consumption growth in the months following its introduction.
India appears unattractive for investors at the moment and investors are looking for a correction in the equity market and possibly a fall in rupee value as well, say analysts.
