The Mexico Fund highlighted the relationship between nearshoring and Mexico‘s exports with a positive effect in 2024.
In the first 11 months of 2024, Mexico exported products with a customs value of US$565.413 billion, which implied an increase of 4.0% at a year-on-year rate.
For all of 2024, Mexican exports are expected to exceed US$600 billion.
In 2023, these external sales were US$593.012 billion, an increase of 2.6% over 2022.
Nearshoring and Mexico’s exports
According to The Mexico Fund, Mexico’s international trade continues to reach record highs. Signs of nearshoring are positive, as the country has managed to benefit from global trade reorganizations. Mexico currently ranks first in U.S. import market share, surpassing China.
On the other hand, the announcement of new foreign investments has generated a positive effect in key sectors. This has driven increased demand for electricity and industrial real estate. In the long term, these factors could contribute significantly to the country’s economic growth.
Foreign investment
The Mexican stock market shows a positive outlook due to stable macroeconomic fundamentals. The Mexico Fund anticipates an improvement towards 2025, driven by the fiscal consolidation announced by the government.
In addition, the valuations of several Mexican issuers are currently attractive. Many of them are trading at significant discounts to their historical averages, despite the fact that much of their revenues are denominated in hard currencies.
Moreover, nominal and real interest rates are expected to decline in the coming months. This scenario, combined with the momentum of nearshoring, is beginning to attract more foreign investment. This could support sustainable long-term economic growth, provided the new administration keeps the country’s risk profile at appropriate levels.
The Fund, for its part, has managed to keep its operating expenses low and continues with its dividend distribution policy (PDM), offering an attractive distribution rate that increases the interest of its shareholders.
Although the short-term environment is uncertain due to the change of government in Mexico and the presidential election in the United States, the Board of Directors and the Fund’s Advisor remain optimistic. They are confident that the Fund will continue to generate long-term value through strategic investments in Mexican companies adapted to the current environment. In addition, they prioritize strong environmental, social and corporate governance (ESG) standards.