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Emerging Markets
Nearshoring: Wall Street buzzword or structural tailwind?
Ana Reynal
Equity Investment Analyst
Jeff Garcia
Equity Investment Analyst
Arthur Caye
Portfolio Manager
Brad Freer
Portfolio Manager
May 31, 2023
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Mexico looks an obvious beneficiary of nearshoring trends as countries move to bring production lines closer to home, with cheaper labour and existing trade partnerships with the US.


Evidence is growing of increasing investment in the country, with 2022’s foreign direct investment (FDI) the highest since 2015. Tesla has made nearshoring news in recent weeks, for example, with plans for a factory worth over US$5 billion in the northern border state of Nuevo Leon.


FDI in Mexico, highest since 2015 (US$, bn)

FDI in Mexico, highest since 2015 (US$, bn)

As at 31 December 2022. Source. Mexican Economy Ministry

Concerns around security, however, as well as the country’s electricity situation, are potential stumbling blocks for this latest Mexico moment.


Earlier this year, a number of Capital Group analysts, portfolio managers and economists visited Mexico to research a range of companies and policymakers. In this piece, they consider whether nearshoring is just an industry buzzword or a genuine structural tailwind.


Ana Reynal is an equity investment analyst at Capital Group with research responsibility for small- and mid-cap companies in Latin America. She has 13 years of investment industry experience and has been with Capital Group for two years. Ana is based in London.

Jeff Garcia is an equity investment analyst at Capital Group with research responsibility for consumer discretionary and staples, financials, healthcare, and information technology in Latin America, as well as small- and mid-cap companies in the US as a generalist. He has 12 years of investment experience, all with Capital Group. Jeff is based in Los Angeles.

Arthur Caye is an equity and multi-asset portfolio manager at Capital Group. As an equity investment analyst, he covers banks in Latin America, the Middle East, Eastern Europe and Africa. He has 29 years of investment industry experience, including 18 years with Capital. Arthur is based in Geneva.

Bradford F. Freer is an equity portfolio manager with 33 years of investment industry experience (as of 12/31/2023). He holds a bachelor’s degree in international relations from Connecticut College and is a CFA® charterholder.

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