A Look Inside the Mexico ETF

Includes: AMX, CX, EWW
by: Carl T. Delfeld

Mexico’s constitution states that the petroleum industry is the exclusive province of the state, and Pemex provides close to 40% of the government’s revenue. But since 2005, daily production has dropped 10% and Mexico still has to import 40% of its oil. Given this performance, perhaps it is a good thing Pemex is not in the iShares MSCI Mexico ETF (NYSEARCA:EWW).

Let’s take a look at the top two holdings that, according to Investopedia, together account for 35% of the ETF basket.

America Movil S.A.B. de C.V. (NYSE:AMX) makes up nearly 24% of the iShares MSCI Mexico Index (EWW). America Movil is one of the largest providers of fixed line and wireless communications in Latin America with over 165 million subscribers. Strong subscriber growth in Brazil, Mexico and Columbia helped America Movil reach a net profit of $1.72 billion (June,2008) during the second quarter. America Movil was recently awarded a license to expand its wireless network into Panama.

Cemex S.A.B. de C.V. (NYSE:CX), the cement and building materials giant makes up nearly 11% of EWW. Revenues for its fiscal year ending June 30 increased 19% from the previous year to $21.7 billion generating nearly $3 billion in operating income. The recent purchase of concrete maker Rinker is expected to help Cemex expand its presence in the U.S. as well as grow its market share in markets like Australia.

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