What is a current account deficit and why does it matter for Mexico's economy?

A current account deficit occurs when a country imports more goods, services, and capital than it exports. Mexico's narrowing deficit (now $12.6 billion) is significant because it indicates the country is becoming more financially self-sufficient. This improvement reduces Mexico's vulnerability to external financial shocks, supports a stronger peso, and increases investor confidence in the economy. For investors, this creates a more stable environment for Mexican companies to operate in, potentially leading to better business performance and stock returns.

How does a stronger peso benefit these Mexican companies?

A stronger peso helps Mexican companies in several ways. First, it reduces the cost of imported materials and equipment, improving profit margins for manufacturers. Second, it increases the purchasing power of Mexican consumers, boosting sales for retail and consumer goods companies. Third, it makes Mexican assets more valuable in dollar terms, which can attract more foreign investment. Companies in this theme, from consumer goods producers like Fomento Economico Mexicano to airport operators and building materials suppliers, are positioned to directly benefit from these currency dynamics.

What is nearshoring and how does it impact Mexican companies?

Nearshoring is when companies relocate their manufacturing or operations closer to their consumer markets, rather than using distant locations like Asia. For Mexico, this trend means more businesses are moving production from Asia to Mexico to serve the North American market. This shift is driven by concerns about supply chain reliability, shipping costs, and geopolitical tensions. Companies in this theme, particularly those in manufacturing, industrial real estate, and infrastructure, stand to benefit from increased investment in Mexican facilities, greater industrial activity, and job growth that supports consumer spending.

What are ETFs and how do they provide exposure to Mexico's economy?

ETFs (Exchange Traded Funds) are investment products that hold a collection of securities and trade on exchanges like individual stocks. The Mexican ETFs in this theme (EWW, FLMX) offer a way to invest in a diversified basket of Mexican companies with a single purchase. Rather than picking individual companies, these ETFs provide broad exposure to the Mexican market, allowing investors to benefit from Mexico's improving economic conditions across multiple sectors. This approach can be simpler and less risky than selecting individual stocks for investors who want exposure to Mexico's economic growth.

13 handpicked stocks

Mexico's Stable Rise

Mexico's economy is showing impressive signs of stability with a narrowing current account deficit. This collection features companies set to thrive from a potentially stronger peso, increased consumer spending, and renewed investor confidence in Mexico's economic future.

Han Tan | Market Analyst

Published on June 30

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Fomento Económico Mexicano, S.A.B de C.V

FMX

Current price

$96.32

As the operator of OXXO convenience stores and a major Coca-Cola bottler, Fomento Econmico Mexicano is a direct beneficiary of increased consumer spen...

As the operator of OXXO convenience stores and a major Coca-Cola bottler, Fomento Econmico Mexicano is a direct beneficiary of increased consumer spending power resulting from greater economic stability.

Coca-Cola FEMSA S.A.B de C.V.

KOF

Current price

$82.03

Coca-Cola FEMSA's performance is closely tied to consumer demand in Mexico; a stronger economy and peso would likely boost sales and improve profit ma...

Coca-Cola FEMSA's performance is closely tied to consumer demand in Mexico; a stronger economy and peso would likely boost sales and improve profit margins on imported materials.

CEMEX, S.A.B. de C.V.

Current price

$9.06

As a leading global cement and building materials company based in Mexico, CEMEX stands to gain from increased construction and infrastructure project...

As a leading global cement and building materials company based in Mexico, CEMEX stands to gain from increased construction and infrastructure projects fueled by heightened investor confidence.

Grupo Aeroportuario del Pacifico, S.A.B.

PAC

Current price

$231.96

Grupo Aeroportuario del Sureste, SABdeCV

ASR

Current price

$318.33

Grupo Aeroportuario Centro Norte

OMAB

Current price

$102.30

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+24.80%

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About This Group of Stocks

Our Expert Thinking

Mexico's reduced current account deficit (now $12.6 billion) signals improved economic stability and fiscal health. This creates an attractive investment opportunity in companies that directly benefit from a strengthening peso, increased domestic consumption, and a more favorable business environment.

What You Need to Know

This collection focuses on domestically-oriented Mexican businesses spanning consumer goods, beverage production, building materials, and infrastructure. These sectors are well-positioned to capitalize on Mexico's economic improvements through increased consumer spending and renewed investor confidence.

Why These Stocks

These companies were carefully selected for their direct exposure to Mexico's improving economic landscape. The portfolio includes established leaders in consumer staples, industrials, and infrastructure that stand to benefit from a stronger peso, increased domestic investment, and overall economic recovery.

Group Performance Snapshot

24.8%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 24.8% over the next year.

8 of 13

Stocks Rated Buy by Analysts

8 of 13 assets in this group are rated Buy by professional analysts.

1.8%

Group Growth

This group averaged a 1.8% return last month.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

📈

Peso Power Play

Mexico's strengthening economic fundamentals could boost the peso, potentially supercharging returns for these domestic companies that earn in pesos but may have some costs in dollars.

🔍

Hidden Value Opportunity

Many investors overlook Mexico's improving fiscal position, creating a potential opportunity to get in before broader market recognition drives up valuations in these carefully selected stocks.

🌎

Nearshoring Advantage

Mexico's stable economy makes it an increasingly attractive manufacturing alternative to Asia, positioning these companies to potentially benefit from the global supply chain realignment trend.

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