David Burrows iShares MSCI Mexico E.T.F. EWW-N COMMENT Jul 11, 2013

(A Top Pick Jan 7/13. Down 9.6%.) His expectation was that as the US economy recovered Mexico was likely to come along with it. Didn’t work out as well as he had hoped. Got stopped out at around $70 a share.

The Mexican economy is tied to the US. He thinks just buying Mexican real estate could be better. [caller was going to move to Mexico].

How to play Mexico. Civil unrest related to drug trade is there, but he thinks there is nothing wrong with buying it.

Mexico – is it a good time to get in? What fund? Currency is your biggest risk. The peso has depreciated against the US dollar. It is not a pure energy trade like Canada often is. Telecoms and Banks don’t benefit from lower currency. Mexico exports energy. It is not the time to get in yet.

It is in a distinct downward trend, not performing as per seasonality. There are some signs of bottoming, but you want more conforming technical evident before entering.

Sold off because of the election in the US. There is a nice little reverse head and shoulders pattern. It is finally showing some good technical action. Seasonally, it is strong from mid-October until the end of May of each year.

Mexico. An emerging market you should trade rather than hold. You get exposure to telecom, beverage, financials and even Walmart Mexico. Fits into the general theme of emerging markets. Must believe that the Mexican pesos will improve, probably due to oil strength.

Some are bullish on Mexico, in part because of the agreement between Canada, US, and Mexico. Plus, a lot of companies are opening up factories there -- lower labour costs and avoiding China's supply chain issues. There's a bullish case for investing in Mexico.

His only concern is that it's pretty much a narco-state. Police officers are being kidnapped by drug lords, tourists are held at gunpoint. Mexico has issues, all related to drugs. All it would take is a couple of terrorist attacks and tourism will dry up. 

Looks good in terms of fundamentals, but you have to be cautious. Only for people who are willing to be more aggressive.

EWW would be our suggestion here. Up 29% YTD, assets are $1.7B, fees 0.50%, yield 1.44%. We think the thesis makes good sense. 
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