Among emerging markets globally, Latin America is now the most prolific for initial public offerings this year. Their total market value increased133 percent over the past year to a value of $1.9 billion, and investors continue to pile in. The amount is by no means colossal, but the growth is enviable given the fact that global IPO volumes have been in a pitiable state of late, down 31 percent from 2014.
So what is driving this growth? Until recently it was Brazil, which was once a proverbial IPO factory, and led the world’s emerging markets for many years in new equity listings. However, Mexico is now almost single-handedly supporting the region. The nation has accounted for 90% of all 2015 stock market debuts in Latin America while the rest of the region had just one this year, a Brazilian insurance broker.
Mexico’s strong export sector and favorable exposure to the surging US economy are undoubtedly boosting investor confidence. It is widely believed that President Peña Nieto’s bold structural reforms are also playing a key role – and rightly so. After all, it is no small feat to open your state energy monopoly to private investment for the first time since the 1930’s, or to break up a telecoms oligopoly formerly dominated by Carlos Slim, the world’s richest man. Executives at the Mexican Stock Exchange believe that the country will remain a leader in equity issuances for the foreseeable future.
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