Brazil's and Mexico's 2017 market analysis
Mexico could be the market to offer investors a wealth of unlikely opportunities in 2017, akin to Brazil’s significant outperformance last year, according to Jupiter’s Ross Teverson.
The manager, who heads up the four crown-rated Jupiter Global Emerging Markets fund, says Trump’s protectionist rhetoric has led to bearishness on the country, which means many fundamentally attractive Mexican firms are cheaply valued.
He says the country is viewed in a similar way to how Brazil was at the start of last year, as many investors grew cautious on the country’s political uncertainty and the low price of commodities.
“I really do believe there are parallels between Mexican stocks in response to Trump and what was happening early in 2016 to Brazilian stocks in response to the political noise there,” Teverson (pictured) said.
“Obviously the two situations are very different in nature, but when I say there’s a strong parallel, I mean that the market is too concerned about the next piece of news flow. It’s not focusing enough on the underlying fundamentals of the companies listed in Mexico.”
The manager’s ability to block out short-term noise regarding regions or sectors stood the fund in good stead last year.
Despite a strong return from the MSCI Emerging Markets index in 2016, particularly in sterling terms, Jupiter Global Emerging Markets achieved a top-quartile return of 36.29 per cent compared to its average peer and benchmark’s respective returns of 30.75 and 32.61 per cent.
“This time last year, it was quite common to hear people say Brazil was uninvestable. I don’t think that is ever a sensible way to think of a market,” Teverson explained.
“What people really meant when they said it was uninvestable was [that] they were concerned about what the next piece of newsflow would be: whether that would be negative and whether that would send the market down further.
“The fact is that, even in markets like Brazil and when you’re having a very difficult time – as Brazil was at the start of 2016 – there are individual companies that are continuing to perform well and where the long-term prospects remain very strong.”
One such company that the manager bought into last year was Ser, a Brazilian education company which operates universities across the North of Brazil.