Lede

Investors are optimistic about the potential for a Mexican nearshoring boom, and have been buying stocks in local real estate, transport, and bank companies.

Summary

• Increasing numbers of companies are moving production closer to North American buyers, particularly in Mexico, and away from Asia following supply chain issues during the pandemic.
• Mexican real estate investment trusts (REITs), like Vesta, Fibra Prologis, and Fibra Terrafina, which own a high number of industrial parks and factories in the north, are seeing a surge in demand and revenues.
• Transport groups, such as Grupo Aeroportuario del Centro Norte and GMexico Transportes, are also benefiting from nearshoring, with significant outperformance compared to the benchmark index.
• Mexican banks are also expected to benefit from nearshoring, particularly regional banks like Banco Regional, which may see an increase in commercial loans from nearshoring.
• Despite some concerns about Mexico's ability to handle a surge in nearshoring, investors are encouraged by the early "strong appetite" from companies to relocate closer to the United States.
• However, some economists are skeptical about the potential for a large surge in capital inflows in the near term due to constraints in certain sectors, such as the power sector.
• While a nearshoring boom is expected to be gradual, investors are advised to get ahead of the trend.