Mexico’s Rising Appeal to Investment Bankers

Wall Street’s growing confidence in Mexico, led by Bank of America, Morgan Stanley, and Goldman Sachs, forecasts a significant surge in investment banking revenue.
Mexico's Rising Appeal To Investment Bankers
Floriane Vita

Mexico, long overshadowed by Brazil, is now gaining attention among investment bankers as a promising market. Major financial institutions like Bank of America, Morgan Stanley, and Goldman Sachs anticipate a substantial increase in investment banking revenue from Mexico. JPMorgan Chase’s CEO, Jamie Dimon, noted the bank’s significant capital increase in Mexico, highlighting a bright growth outlook.

Mexico’s appeal stems from a nearshoring boom during the Covid era, driving factory establishment and job creation, particularly in the industrial sector. The country’s foreign direct investment has contributed to the peso’s strong performance, and its government finances remain robust compared to other developing nations. The upcoming presidential election in June presents an opportunity, but also a challenge, as the next president must focus on policies to attract investment, particularly in clean energy.

In 2023, Mexico’s share of investment banking revenue in Latin America rose to 20% from 13% in 2022, outpacing Chile, Colombia, and Argentina. While Brazil still dominates in revenue, Mexico is closing the gap, with growth forecasts surpassing Brazil’s through 2025. Bank of America reported the largest revenue increase in Mexico in the region in 2023, with plans to continue investment in the country.

Notable developments in Mexico’s capital markets include a record-breaking year for corporate bond sales and expectations of strong equity issuance. Real estate investment trusts contributed significantly to Mexico’s equity sales last year, with major offerings from companies like Corp. Inmobiliaria Vesta and Traxion. The anticipated IPO of Fibra Next could mark the country’s largest since 2018.

Investors are also encouraged by Mexico’s central bank’s efforts in controlling inflation, with a cautious approach expected in reducing borrowing costs. This fiscal responsibility, coupled with the country’s growing industrial and economic capabilities, positions Mexico as an increasingly attractive destination for investment and business growth.

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