Where Are The investment opportunities in the Mexican economy?

Where are the investment opportunities in the Mexican economy? April 14th, 2009 The Mexican economy continues downhill and in this scenario is difficult to find investment opportunities. However, this article will try to decipher the investment opportunities that can bring economic recovery. Undoubtedly, the projections on the evolution of the Mexican economy for this year are increasingly alarming. In the last issue of the consulting LatinFocus Consensus Forecast, the survey conducted by the same realized an expected contraction of gross domestic product (GDP), Mexico 3.3% for 2009. The U.S. economic crisis is reflected faithfully in the performance of the Mexican economy, has a less desirable impact on the labor market. Unemployment is widespread in different segments and no longer just a problem for the lower segments of the population. While the largest job losses in Mexico have been observed in manufacturing and in construction, how could it be otherwise, also in the field of professional and independent individuals who provide services for companies has been observed sharp deterioration in the conditions of employment with 82,800 lost jobs in the last five months.

According to analysts Invex, for this year, Mexico could lose 320,000 jobs formal. In February, the unemployment rate stood at 5.30% of the economically active population (EAP). The only sectors generating jobs in Mexico in this context of crisis are the extractive industry, electrical industry and commerce. With the deterioration in working conditions, the retail consumer sector faces a difficult outlook because families have lost their purchasing power and those that still remain, have adopted a low profile to protect themselves against the consumer in case of falling into unemployment. Thus accumulated retail sales fall five consecutive months (in March recorded a fall of 4.6%), and are located at its worst level since 2003.

Another sector that is suffering is strongly real estate crisis, affected both by the context of uncertainty as by the reduction of funding. Is that the crisis is limiting the generation of funding to the sector and in the first quarter has seen a 27% contraction in mortgage lending. This past weekend, is also known that the onset of new housing projects in 2008 had been a contraction of 76.4% compared to 2007. Mexican automotive sector is also closely linked to the U.S. and employs 450,000 workers, is suffering from this bad time of the northern economy. The possible bankruptcy of General Motors (NYSE: GM) and Chrysler LLC remain on edge auto parts sector in Mexico. For Armando Soto, director of consulting firm Kaso and Associates, the occurrence of bankruptcies in the U.S. auto industry, "could trigger a domino effect throughout the industry (automotive)?. Despite the negative outlook that looks at the economy of Mexico, Felipe Calderón remains optimistic and stresses as positive for having managed to reverse the depreciation of the peso (which went from a high of $ 15.406 per dollar to settle at around $ 13, 38 per dollar of product Banxico right decisions and the Ministry of Finance) and the brakes made in the formal job destruction during the month of March (which created 4,000 jobs).

Certainly these data are insufficient to maintain optimism for a long time under the continuity of the problems they encounter the Mexican economy. Beyond the structural reforms that Mexico should pursue to strengthen its economy, it is clear that immediate recovery is inevitably tied to the fate of the U.S.. In connection therewith, may be taken as good news the latest economic data from the U.S. economy that encourage hopes that economic recovery could occur in that country before the end of 2009. According to the survey conducted last week by the Wall Street Journal among 54 economists, they expect the recession ends in less than six months in the United States. Thus, in early October would be giving rise to economic recovery in North America and with it hope for the rest of the world. It is still unclear whether the recovery of the U.S. economy will result in a sharp or moderate (in the form of V or L), something no less to anticipate their impact on the Mexican economy. If the U.S. economic recovery occurs toward the end of the third quarter of this year, you can expect to see their effects on the Mexican economy by early 2010.

Thus, the recovery of Mexico's economy is largely explained by the external sector, and particularly in companies producing consumer goods. The industrial sector of durable goods producer will take a longer course in his recovery. The recovery of the Mexican external sector strengthened domestic demand recovery will benefit the service producing sector and consumer goods (also here the durable goods sector will have to wait a little longer for recovery). Within the food companies, Grupo Bimbo SAB de CV (BMV: BIMBO, OTC: GRBMF) promises an interesting growth will be reflected in the value of their shares. Grupo Bimbo is in the top 10 ranking of multinationals companies prepared by "American Economy? and is in full period of expansion in the Chinese market, which has entered in 2006. The company has a presence in 18 countries in America, Europe and Asia, has about 5,000 products and more than 150 prestigious brands. In late January of this year, Grupo Bimbo has completed the acquisition of Weston Food Company Inc, making the subsidiary of the group (known as Bimbo Bakeries USA-BBU-), one of the largest baking companies in the U.S..

Despite the crisis, the Group Bimbo has maintained its growth. In the fourth quarter of 2008, the company recorded a sales increase of 15.1% and 31.1% increase in net majority income year, despite the crisis that deepened during this period. Additionally, the company increased towards the end of 2008 its cash position in 84.9% compared to 2007, increasing its strength in a context of tension that impedes access to financing.