Banking On Mexico
Move over China and India.
Brokers and investment bankers are flocking south of the border, pouring millions into equities in Mexico, thanks to new laws that lifted investing restrictions.
Among the big banks capitalizing on the booming economy is U.K.-based Barclays PLC. The firm announced Thursday that its investment banking and asset management divisions are expanding their businesses in the country. Barclays has already invested $100 million in Mexico.
Barclays is listing five more of its iShares funds on the Mexican bourse, bringing the total listed to 44. Last year, the funds represented 15% of all trading volume on the exchange.
"In less than six months we have shown clients and potential clients that our focused business model and strategy can add significant value for them in Mexico, just as it has for clients throughout the world," said Peter Goettler, head of Investment Banking and Debt Capital Markets, Americas and CEO of Barclays Capital for Latin America, in a news release. "We're just getting started."
Since setting up shop in September, the bank helped complete a string of landmark transactions, including a $2.8 billion bond exchange and tender offer for the Mexican government and $2 billion in aggregate offerings by Cemex.
It's no surprise that Mexico is ripe for the picking. Economic growth is at its fastest pace in six years. And unlike its neighbor to the north, the homebuilding industry is thriving, fueled by lower interest rates and government-subsidized programs for low-income homebuyers.
Builders are poised to cash in on a so-called housing deficit estimated at 4.2 million homes. And while investors are shying away from the slowing U.S. housing market, they're jumping into Mexico's. Last month, Barclays co-led a $78 million residential mortgage-backed security issue for Hipotecaria Su Casita, the country's premier mortgage originator and servicer.
Foreign direct investment in Mexico rose more than 6% last year to nearly $19 billion, according to the Economy Ministry. Now the Mexican stock index, the IPC, is trading at an all-time high, after surging 54% in the last year.