The Mexico exchange traded fund has turned around, moving back above its long-term trend line, as the Mexican central bank points to encouraging and potentially accelerating economic growth.
The iShares MSCI Mexico Capped ETF (NYSEArca: EWW) was up 1.0% Friday, trading back above its 200-day simple moving average. EWW jumped 7.0% over the past month, but the fund is still down 6.4% year-to-date.
“Without a doubt there have been some weak growth figures, but on the other hand we’ve also seen figures more recently that are a bit more encouraging,” bank Governor Agustin Carstens said at the Mexican Banking Association’s annual meeting, Bloomberg reports. “It’s possible the first quarter has seen growth a little bit weaker, but it’s also probable that there will be an acceleration in growth in the rest of the year. Seeing exactly how to balance this is the challenge.”
Banco de Mexico has kept its benchmark rates at a record-low 3.5% as inflation slowed to 3.89% in early March, or below the 4% upper limit range.
Mexico’s economy revealed some underlying strength, with an unexpected trade surplus in February as exports jumped 4.7%. Additionally, observers are painting a more optimistic outlook after U.S. economic data showed an increase in payrolls last month, which could support Mexico’s export industry. [ETF Chart of the Day: A Mexico Comeback?]