Mexico had no trouble attracting capital in the first half of 2010

Capital poured into Mexico in the first six months of 2010. Foreign investment in the first six months of this year reached US$20.4 billion, nearly double its level in the first half of last year.

Direct foreign investment (DFI) totaled US$12.2 billion, just US$1.8 billion short of the DFI in all of 2009. Reflecting Mexico’s success as a manufacturing export power, 62.8% of DFI in the second quarter went into manufacturing. Commerce and financial services also received DFI (17.1%, 12.8%, respectively, of the total). Over US$5 billion of DFI was due to Heineken's acquisition of Femsa. Without that acquisition, the DFI figure wouldn't have been so impressive.

In the first six months of 2010, portfolio investment totaled US$8.2 billion. That was US$0.5 billion more than in all of last year. Foreign investment in fixed income instruments came to US$7.6 billion, more than double 2009’s total. Foreign investment even rose in equities (US$0.6 billion). It might not seem like much but contrast it to the US, where investors withdrew US$33.1 billion from domestic stock market mutual funds in the first seven months of this year. If that pace continues, the withdrawals will be greater than in any year (except, of course 2008 where investors withdrew US$151.4 billion) since the 1980’s. Money is pouring into bonds: between January and July, investors put US$185.3 billion into bonds. That is on track to approach the 2009 record.

International financial markets are open to Mexican borrowers and Mexican firms are taking advantage of that, once again borrowing abroad. In 2009, Mexican companies (excluding banks) repaid US$3.7 billion (net) in foreign debt. In the first six months of this year, they borrowed (net) US$6.6 billion abroad. Commercial banks reduced their net foreign debt by US$1.2 billion in 2008 and 2009; in the first half of this year, they took on (net) US$1.9 billion.