Emerging-Market Carnage Swallows Mexico as Traders Snub Earnings

  • Mexican ETF has largest outflows among peers excluding China
  • Fund's total assets shrink by 16% to lowest in two months

Last week’s $1.3 billion rout in exchange-traded funds focused on emerging markets engulfed even Mexico, where a stellar earnings season was overshadowed by concern that global growth is slowing.

Traders pulled $155.2 million from the nation’s flagship iShares MSCI Mexico Capped ETF in the five-day period ending May 6, the most among major developing nations after China, according to data compiled by Bloomberg. The fund’s total assets shrank by 16 percent in the span to a two-month low, while those in the iShares MSCI Brazil Capped ETF declined by 6.2 percent. Losses from Mexican equities last week were deepened in dollar terms by the region’s biggest currency slide.

Mexico’s most traded stock ETF extended losses Monday, after posting the biggest weekly tumble since January, as disappointing trade data from China and prospects for higher U.S. interest rates sapped demand for riskier assets. Investors dumped Mexican shares even as data showed corporate profits exceeded analysts’ estimates by the most in at least two years, buoyed by consumer spending in Latin America’s second-biggest economy.

“People are taking profits because the first-quarter reports from Mexican businesses came in very good,” said Fabiola Molina, a money manager at Mexico City-based Pichardo Asset Management, which oversees about 2 billion pesos ($110 million) in Mexican equities and is overweight consumer-focused companies. “It’s still more about emerging markets. They’re the most effected if there’s a weaker global environment.”

The iShares Mexico ETF climbed 1.6 percent Tuesday to $51.24 as of 12:42 p.m. in New York.

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