March 22, 2011

Mexico Day at NYSE Brings Top Mexican Bankers, CEOs to New York

‘Complex relationship’ between U.S., Mexico reflected in trade relations, security risks

Mexican government and corporate officials rang the opening bell for Mexico Day at the NYSE. Mexican government and corporate officials rang the opening bell for Mexico Day at the NYSE.

Mexicans made the case for Mexico on Tuesday at the New York Stock Exchange, where the country’s ambassador to the United States and a former central banker now running Banorte along with other officials gathered to discuss trade relations, the drug wars and the upcoming presidential election.

This was the second time that Mexican chief executives and government officials rang the opening bell for Mexico Day at the NYSE. Tuesday’s event promoted the 17 Mexican companies that NYSE Euronext currently lists, comprising a total global market capitalization of about $202 billion.

“Mexico is a profitable country for foreign investors,” said José Zozaya, chairman of the board for American Chamber/Mexico, in comments about his campaign to improve public perceptions of Mexico. “Mexico is a good brand. I never get tired of saying it.”

Mexico’s ambassador to the United States, H.E. Arturo Sarukhan, said during opening remarks that security risks are the biggest issue as border crossings are closely monitored for drugs and illegal immigrants along with the $1 billion in legitimate goods traded on a daily basis.

There is a “complex relationship” between the two countries, the ambassador said, pointing to 6 million undocumented Mexican workers in the United States, 1 million American expatriates (many of them retirees) in Mexico and Mexican oil imports to the U.S. that surpass those of the Middle East. Immigration issues will affect the 2012 presidential election issues in both the United States and Mexico, he said.

“We in Mexico have become the second-largest purchaser of U.S. exports on the face of the Earth,” Sarukhan said. “It behooves Mexico to work with the U.S. to ensure that our borders are secure.”

Zozaya argued that Mexico is the 11th-largest economy in the world, with a 2011 GDP outlook of 4% to 5% that tops the U.S. outlook of 3.2%. Foreign direct investment in Mexico has surpassed $19 billion, and the country has “one of the most open economies in the world,” he said.

Turning to the Mexican government’s war against the country’s drug cartels, Zozaya acknowledged that security issues surrounding organized crime continued to top the government’s agenda and homicide rates were twice as high as those in the United States. But he also expressed frustration that the U.S. media’s focus on the drug wars overshadows its coverage of the Mexican economy’s successes, including balancing of the government deficit and infrastructure growth.

“There is a misunderstanding about what we are projecting to the world,” Zozaya said. “Yes, I know there are organized crime and drug cartels, but Mexico is in much better shape than many other countries.”

During a question-and-answer period, Claudio Brocado, a senior portfolio manager with Boston-based Batterymarch Financial Management, said he agreed with Zozaya about Mexico’s perception problem.

“Brazilians do a better job of selling themselves to the world,” Brocado said, noting that Brazil’s homicide rate is higher than Mexico’s.

Still, at least one global fund manager at the event, Joon-Ho-Lee, senior vice president of international equity at Mesirow Financial Investment Management, said that Mesirow is invested in Mexico because “valuations are attractive” relative to other Latin American markets.

Indeed, “Mexico is in a very different situation from other emerging markets” because of its relatively low deficit and low inflation, said another Mexico Day speaker, Guillermo Ortiz Martinez, president of Grupo Financiero Banorte, who was formerly Mexico’s secretary of finance, a Bank of Mexico central banker and Mexico’s ambassador to the International Monetary Fund.

Martinez asserted that the potential for growing financial services in Mexico “is huge”—and that the biggest risk it faces, along with every other country in the global economy, “is the U.S. fiscal situation.”

Read about Invesco’s cross-listing on the Bolsa Mexicana de Valores of 38 PowerShares exchange traded funds at AdvisorOne.com.

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