Additionally, Mexican markets were supported by optimism that the Organization of Petroleum Exporting Countries and other large crude oil producers would limit production. Mexican assets have been weighed down by the plunge in oil prices, which raised concerns about the government finances and triggered negative outlook on the country’s credit rating.
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Investors mulling positions in EWW should be mindful of Mexico’s central bank and its plans for interest rates.
Although Mexico’s central bank said the first rate hike earlier this year was not the start of a new tightening cycle, the central bank surprised global investors Thursday when it boosted borrowing costs by 50 basis points to 4.75%, which is good for the country’s highest interest rate since 2009.
“Mexico has matured into something like the grown-up in an emerging market room full of volatile adolescents. Manufacturing growth and intelligent price hedging have cushioned the effects of the 2014 oil price collapse, keeping GDP growth steady between 2% and 2.5% for nearly three years now,” according to Barron’s.
For more information on the Mexican markets, visit our Mexico category.
iShares MSCI Mexico Capped ETF (NYSEArca: EWW)
