Traders Seeking EM Opportunities Shouldn't Forget Latin America

Emerging markets can offer traders vast opportunities for short-term market moves, and one area of consideration should be Latin America.

Mexico specifically could offer bullish trends given the way its economy started 2023.

“Mexico is the silver lining in Latin America as it remains on a strong footing, on the back of resilient external demand, domestic consumption, and the catching up in fixed investment,” JPMorgan economists including Cassiana Fernandez and Gabriel Lozano wrote in a report, per Bloomberg.

Like the rest of the world, Latin America was hit with inflation woes in 2022, but out of the gate, Mexico appears to be leading the pack in terms of economic growth.

Mexico’s economic activity beat all estimates in January, expanding at the fastest annual pace in five months as the country continues to recover more quickly than expected,” another Bloomberg report noted.

“Activity in Latin America’s second-largest economy grew 4.4% compared to the previous year, Mexico’s statistics institute said,” the report added further. “The result exceeded all estimates by economists in a Bloomberg survey, which had a median growth forecast of 3%. On a monthly basis, activity increased 0.56%.”

That said, traders should keep the Direxion Daily MSCI Mexico Bull 3X Shares (MEXX) handy. With its triple leverage ability, MEXX seeks daily investment results equal to 300% of the daily performance of the MSCI Mexico IMI 25/50 Index, which 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.

A Broad Latin America Trade

Traders looking at Latin America as a whole can consider the Direxion Daily Latin America Bull 3X ETF (LBJ). LBJ seeks daily investment results equal to 300% of the daily performance of the S&P Latin America 40 Index, which is a float-adjusted market capitalization-weighted equity index of issuers drawn from five major Latin American markets: Brazil, Chile, Columbia, Mexico, and Peru.

Because it casts a wider net in Latin America, traders should be aware of how certain countries will affect the region as a whole.

“Economies in Latin America and the Caribbean are expected to post a combined growth of 1.2% in 2023, the United Nations economic commission for the region (ECLAC) said on Thursday, slightly reducing its previous forecast of 1.3%,” reported Discourse on Development. “The region’s economies, ECLAC said in a statement, face a complex external scenario this year, marked by weak growth in economic activity and global trade, while interest rates should remain at high levels despite slowing inflation.”

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