With Mexico’s stable economic growth and market potential, investing in Mexico stocks has become increasingly attractive for global investors. However, it may be challenging for overseas investors to directly invest in Mexico stocks due to capital controls and information barriers. This article will provide 4 feasible ways for overseas investors to gain exposure and buy Mexico stocks. The key is to leverage financial instruments like ADRs and mutual funds, use professional services like investment banks and foreign brokers, and partner with locals by co-investing in Mexico enterprises or real estate projects. Proper due diligence and risk management are necessary when investing in an emerging market like Mexico.
Purchase Mexico ADRs listed on major global exchanges
American Depositary Receipts (ADRs) issued by Mexican companies are one of the most convenient ways for overseas investors to buy Mexico stocks. Many large Mexican companies have ADRs traded on the NYSE and Nasdaq, like America Movil, Fomento Economico Mexicano, Grupo Televisa, etc. These ADRs are denominated in USD and can be conveniently purchased by opening a normal brokerage account. The depositary bank handles all custody and foreign exchange requirements. However, the number of Mexico stocks available as ADRs is still limited compared to the overall Mexican market.
Invest through Mutual Funds/ETFs focused on Mexico stocks
Actively managed Mexico mutual funds and passive ETFs tracking Mexican market indexes provide another route for foreign investors to gain exposure to a basket of Mexico stocks. For example, iShares MSCI Mexico ETF (EWW) tracks large and mid-cap equities in Mexico, while Fidelity Series Mexico Fund (FBIOX) actively invests in Mexican companies across sectors and market caps. These funds trade in the U.S. but offer exposure and diversification to the Mexican market. However, expense ratios and fund managers can vary significantly in performance.
Open a brokerage account with a bank that offers access to Mexico stocks
Large global investment banks like J.P. Morgan, Goldman Sachs often provide brokerage services that allow investing in Mexican equities. These international brokers have local offices and trading desks in Mexico, enabling access to stocks listed on the Mexican Stock Exchange. Accounts can often be opened remotely online. However, minimum investment amounts tend to be high. Transaction costs and fund transfer fees should also be considered carefully.
Partner with locals to co-invest in Mexico companies or real estate projects
For larger investment amounts, overseas investors can explore direct investment opportunities in Mexico by partnering with local firms or individuals. Areas like real estate, infrastructure, and private enterprises provide co-investment scenarios where foreign investor capital combines with local expertise. However, solid due diligence is crucial to evaluate risks and ensure the credibility of any local partners in Mexico.
In summary, overseas investors interested in Mexico stocks can gain exposure through instruments like ADRs and Mexico funds, use international brokerage services, or look for co-investment opportunities with Mexican partners. Conducting comprehensive due diligence and managing risks prudently are key when investing in Mexico.