* Five times more portfolio investment in Mexico than Brazil
* Stocks and government debt notch records in fourth quarter
* Current account deficit widens to $6.49 billion
By Krista Hughes
MEXICO CITY, Feb 25 Foreign investors poured a
record $80 billion into Mexican stocks and bonds last year,
almost five times more than in Brazil, central bank data showed
Foreign portfolio investment inflows doubled in 2012 from a
year earlier on optimism about reforms promised by Mexico's new
government and solid growth of about double that of Brazil,
Latin America's biggest economy.
Investment in both private and public sector assets picked
up in the fourth quarter to notch quarterly records for the
period since 1995, when the current data series began.
"What you see there is that we had more money coming into
stocks in the fourth quarter, a big pick-up after the election,"
UBS economist Rafael de la Fuente said.
Foreign inflows to Mexican stocks and corporate debt totaled
$5.61 billion in the fourth quarter, up from $1.21 billion in
the third quarter, and $10.04 billion for the year.
Total portfolio investment inflows accelerated slightly to
$23.53 billion in the quarter, with flows into peso-denominated
bonds hitting more than $14 billion and helping portfolio
inflows to reach $80.23 billion in the full year.
Net foreign portfolio inflows into Brazil were $16.53
billion in 2012, down from $67.8 billion two years earlier after
the country slapped strict limits on hot money inflows to stem a
rise in the real currency.
But Brazil attracts much more foreign investment into direct
assets such as factories and infrastructure, netting $65.27
billion in foreign direct investment in 2012 compared to
Mexico's $12.66 billion, which was around half the level of
Foreign direct investment in Mexico fell $909 million in the
fourth quarter, the first fall since at least 1995. But the
central bank said the outflow was largely due to the $4 billion
public offer of shares in Spanish-owned Banco Santander
and thus a reclassification of funds from direct to portfolio
"(This) does not imply the removal of resources from the
economy," the central bank said in a statement, adding that
without the share transaction, foreign direct investment for the
year would have been $3.2 billion in the quarter and $16.77
billion in the year.
The data showed Mexico's current account deficit widened to
$6.49 billion in the fourth quarter of 2012, largely due to
interest and dividend payments to overseas investors.
The accumulated current account deficit for all of last year
was $9.249 billion, the equivalent of 0.8 percent of gross
domestic product, the central bank said.
The quarterly balance of payment data, which provides a
snapshot of Mexico's dealings with the outside world, showed
that imports during the quarter again outweighed exports.
The surge in the overall deficit from a downwardly revised
$941 million in the previous quarter was driven by a $6.03
billion deficit in the section of the accounts covering interest
on Mexico's foreign debt, salaries paid to foreign workers and
De la Fuente said the number probably reflected interest
payments on foreign currency debt, since dividend payments were
mostly reinvested and foreign direct investment was negative in
Mexico's foreign reserves rose to a new record of $167.05
billion by the end of December.