The Mexico exchange traded fund did not get much help after Moody’s Investors Service upgraded the country’s credit rating.
The iShares MSCI Mexico Capped ETF (NYSEArca: EWW) closed modestly lower Wednesday, adding to its 9.2% year-to-date decline.
Citing improvements due to economic reforms signed by President Enrique Pena Nieto, Moody’s raised Mexico’s credit rating to A3, or upper medium investment grade and one rung higher than at Fitch Ratings and Standard & Poor’s, Bloomberg reports.
“Those who focused on the bigger picture, that the new administration was committed to pursuing much-needed change, and who were patient in seeing this thesis play out, are being rewarded today,” Robert Abad, a manager at Western Asset Management Co., said in the article.
The Mexican government approved 10 constitutional amendments under Pena Nieto’s first year, including a dissolution to the monopoly on oil production and improved competition in the telecom sector. Mexico is Latin America’s second-largest economy behind Brazil.
The rules of the game have been redefined” in Mexico, Mauro Leos, an analyst at Moody’s, said in the article. “If over time, in a two- or three-year horizon, we see the impact of the reforms is significant and leads to higher growth or better fiscal indicators than what we currently expect, that could lead to an even higher rating.”