As Mexico's Economy Grows, Get Leveraged Exposure With This ETF

It can be tricky to navigate the emerging markets (EM) space, but potential growth opportunities could exist for certain countries in Latin America. Take Mexico, for example, which saw its economy grow in Q1.

“Mexico’s economy showed life in the first three months of the year, growing 0.9% compared with the final quarter of 2021, according to preliminary estimates released Friday by Mexico’s statistics agency,” an AP News report says.

“That was improvement over the zero growth in final three months of 2021 and the slight retraction in the quarter before that, but the economy continued to show weakness after its initial rebound from the COVID-19 pandemic-induced shutdown of 2020, fueled largely by the United States’ economic recovery,” the report adds.

However, there’s still room for improvement. Mexico’s economy still needs to reach pre-pandemic levels, which should open up potential in the short term to play a trade on more potential growth.

“Its weakness has extended and prospects for the year have been revised down,” said Moody’s analytics director Alfredo Coutiño. “Mexico will report the second-smallest growth among Latin America’s seven largest economies, preceded only by Brazil.”

Triple Leverage on Mexico

Up about 20% within the last 12 months, traders looking to get thrice the leverage on Mexican equities can look to ETFs like the Direxion Daily MSCI Mexico Bull 3X Shares (MEXX). The fund jumped as high as 26% year-to-date before correcting in April.

MEXX seeks daily investment results, before fees and expenses, of 300% of the daily performance of the MSCI Mexico IMI 25/50 Index. The fund invests at least 80% of its net assets in financial instruments, such as swap agreements and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

The index is designed to measure the performance of the large-, mid-, and small-capitalization segments of the Mexican equity market, covering approximately 99% of the free float-adjusted market capitalization in Mexico.

MEXX Chart

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