EWW Stock Recent News

EWW is exposed to lots of pretty resilient consumer staple exposures that have kept its head above water. Moreover, the Mexican Peso has been a stalwart currency this last cycle, since it trades closely with the very strong dollar.

Mexico has lower inflation at the cost of austerity, but a consumer staple-dependent EWW ETF is better exposed than most to worse spending conditions. Implicit dollarization of the Mexican Peso protects American investors from excessive FX risk.

Not all emerging markets offer the same opportunities for investors.

Economies of Latin America and Caribbean have continued their strong post-pandemic rebound, but the winds are shifting as global financial conditions are tightening and commodity prices are reversing their upward trend, while inflationary pressures persist. The reopening of contact-intensive sectors, especially hospitality and travel, the unwinding of pandemic pent-up demand, and still favorable external financial conditions supported a solid expansion in the first half of the year, allowing services to catch up with manufacturing, and employment to reach pre-pandemic levels.

Mexico is particularly well-placed to benefit from companies relocating their operations closer to their main destination markets (nearshoring). Companies relocating to Mexico in the five-year outlook, however, are still likely to face security-related risks, particularly road cargo theft and extortion.

EWW is a rather liquid, large-AUM option to express a bullish sentiment on a cohort of the principally large-size Mexican equities. Persistent inflation hints more aggressive rate hikes are in the cards, though this is not necessarily bullish for the peso, as higher rates can trigger a recession.

EWW invests in Mexican equities. I think the fund is probably fairly valued unless one is more generous with earnings expectations.

Like the actual war in 1862, the Mexican economy and market emerged winner in 2022. However, over the long term, the battle might present us with a different victor if the situation in East Europe improves.