Mexico attracts investors despite financial uncertainty

Despite several factors of financial uncertainty, Mexico has grown more attractive to investors
Mexico attracts investors despite financial uncertainty
The 2,500 people who were surveyed admit that there are certain middle-term risks - Photo: Brendan Smialowski/AFP
21/06/2018
14:41
Ivette Saldaña
Mexico City
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Both national and foreign companies have grown resilient amidst Mexico’s financial uncertainty. In spite of investors’ perplexity towards the renegotiation and the presidential election, Mexican economy has grown more attractive for investment, mergers, and company acquisitions, according to the EY consultancy firm.

For the Trust Barometer Study of Capital Global at EY, executives, vice-presidents, and directors of both national and foreign enterprises have ranked Mexico as the fifth most important destination for investment after Brazil, the United States, Canada, and Argentina. A ranking where the country had never appeared before.

“Despite the environment of uncertainty, which could generate great pressure on the country’s economy, mergers and acquisitions in Mexico have had the best results we’ve ever seen since we began this study five years ago,” said Oliver Hache, leading member of EY.

The 2,500 people who were surveyed admit that there are certain middle-term risks, such as trade policies, potential protectionism, an increase of interest rates in the United States and its indirect effect on the Mexican economy, as well as foreign exchange fluctuations and digital disruption, among other things.

In spite of these risks, “the USA’s 2016 election taught Mexican businessmen a very valuable lesson in terms of adaptation. They focus their attention on business metrics rather than politics, strengthening their central businesses and cash reserves in order to tackle adversities,” Hache stated.

A rough 76% of subjects from our survey are planning to make acquisitions in the country. This is the highest percentage we’ve seen in the past few years. In October 2013, there was a 39% willing to make acquisitions, and 59% in 2015. Last October, it reached a 64%.

Hache said that “most Mexican companies are planning on carrying out mergers and acquisitions in the next 12 months, and a large majority is certain that the conditions for financial transactions will continue to improve,” this is a result of European companies’ recent interest in Latin American countries.

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