Bullish on Mexico

"According to Dr. Marc Faber, Mexico, the thirteenth largest economy in the world, is largely misunderstood. Most investors seeking emerging market exposure focus on the BRIC countries. But as Faber points out, Mexico is one of the world's largest developing economies as measured by GDP. On a per capita basis, the Mexican economy is larger than China, India and Brazil.

It is true that our neighbors to the south are coming back from one of the country's worst recessions on record. Reports of upward revisions in growth could translate into the potential for a good long-term investment.

Dr. Faber seems to think so. He continues to be pleasantly surprised by how well the Mexican economy is doing and he thinks it will continue to outperform most emerging markets over the long-term.

His reasoning is as follows; ten years ago Mexican wage rates were 270 percent greater than China's. Now Mexico's wages are only 45 percent higher than China's, and they are trending lower. What this means is that over the next 5-10 years we could see Mexico take over the manufacturing prowess that China currently holds, particularly with Mexico's close proximity to the United States. In theory, as the Mexican wage rate trends lower in comparison to China's, Mexico will attract more manufacturing jobs - thereby growing its middle-class and its economy." - in SmallCapInvestor



Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.