Making matters worse for EWW is that its fundamental backdrop is arguably not nearly as bad as those for rival Latin America ETFs, but the ETF has not responded in kind. Mexico initiated political and energy sector reforms last year and is expected to post GDP growth superior to that of the U.S. this year. Mexico is also a major silver producers and EWW has a 17.6% weight to the materials sector, but the ETF has received no benefit from the iShares Silver Trust (NYSEArca: SLV) gaining 9.3% this year. [No Gusta on the Mexico ETF]
Earlier this month, Moody’s Investors Service raised Mexico’s credit rating to A3, or upper medium investment grade and one rung higher than at Fitch Ratings and Standard & Poor’s, but since Feb. 5, EWW is off nearly 3%.
iShares MSCI Mexico Capped ETF
Tom Lydon’s clients own shares of SLV.