Mexico has an ideal location based on its proximity to the United States and has a strong manufacturing industry already established
Abigail Kilgore
If I were a cash manager of a MNC based in the United States, I would be interested in investing additional money into Mexico. Out of several countries, the US currently has the most options for bonds with the highest yields over several different durations. But to diversify their portfolio and increase potential earnings, we need to look for a country with low interest rates but high returns. Before investing in Mexico, it is important to understand what their strengths are to ensure the opportunity matches what one is looking for. Mexico has an ideal location based on its proximity to the United States and has a strong manufacturing industry already established (Rascon, 2021). The reason I picked this country is because of how different their strengths are compared to the US along with their anticipated growth over the next year. Mexico is growing in popularity for their medical device manufacturing (Rascon, 2021). This is a great industry to be investing in with the COVID variants causing increased focus back onto the pandemic. On the other hand, with vaccinations increasing more families are looking to travel and return to somewhat normal. With that, Mexico is anticipated increased tourism and travel this year over last, allowing for strong economic stimulus. Mexico’s interest rate is currently 4.5%, up .25% from June (Mexico Interest Rate… n.d.). Their low interest is attractive currently being on the lower end with a predicted trend of growth. The expected yield for a 10-year government bond in Mexico is currently 7.242% (Mexico Government Bonds… n.d.). The anticipated yield on a 1-year bond is 5.597% which has increased by 1.5% over the last 6 months (Mexico Government Bonds… n.d.). The economic outlook combined with the predicted yield make Mexico my top recommendation for a foreign investment.
References
Mexico interest Rate 2005-2021 Data: 2022-2023 Forecast: CALENDAR: HISTORICAL. Mexico Interest Rate | 2005-2021 Data | 2022-2023 Forecast | Calendar | Historical. (n.d.). https://tradingeconomics.com/mexico/interest-rate (Links to an external site.)
Mexico government bonds – YIELDS CURVE. World Government Bonds. (n.d.). http://www.worldgovernmentbonds.com/country/mexico/ (Links to an external site.).
Rascon, R. (2021, May 10). Why is Mexico an attractive destination for foreign Direct investment? News & Insights for Manufacturing in Mexico. https://insights.tetakawi.com/why-mexico-is-attractive-for-foreign-direct-investment (Links to an external site.).
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