Pimco Sees Strong Mexico Fundamentals

The fundamentals of the Mexican economy are strong, according to a Pimco executive, though the country and other EM economies will be competing with US high yield corporates for investor cash. “Fundamentally, the Mexican economy is in much better shape than other emerging economies,” says Lupin Rahman, vice president of EM portfolio management at Pimco, speaking on a panel at LatinFinance’s Cumbre Financiera Mexicana. “Looking at the EM space, Mexico is definitely a country that most investors would feel comfortable in, as it has great fundamentals versus the rest of the EM space,” she says. For non-dedicated investors, however, making the case for Mexico is much more difficult, especially in a risk-averse environment, she adds. Providing competitive returns versus known US names will be a challenge for all of the emerging markets, according to Rahman. The manager declines to indicate how Pimco is positioned in Mexico, or what sectors might be the most compelling. Looking ahead, Rahman says she believes the full deleveraging process for EM corporates and investors is a question of several quarters, if not years. “I can’t say I see a strong recovery in 2009,” says the investor, noting that the rebound in Mexico or emerging markets is a matter of resolving core economic problems in developed markets. In December, Pimco had up to $45bn allocated to LatAm, including local markets, from a portfolio worth over $800bn.