Portfolio investment: not what it was

More on Mexico's capital account deficit in the second quarter...

Portfolio investment continued flowing into Mexico in the second quarter, just  not in the massive quantities of prior quarters. The second quarter's US$6.56 billion in portfolio investment was the fifth largest quarterly inflow of portfolio investment in Mexico’s history. Nonetheless, it was just over two-fifths (41.4%) of the portfolio investment in the first quarter of 2012. Foreign investment in Mexican stocks (US$0.91 billion) was less than half what it was in the first quarter. The US$5.65 billion of foreign investment in fixed income instruments was two-fifths of its first quarter level.

Had portfolio investment arrived in its first quarter quantities, Mexico's capital account would have shown a good-sized surplus in the second quarter...

A big jump in Mexican deposits in foreign bank accounts in the second quarter..

Mexico posted a small US$1.84 billion capital account deficit in the second quarter, a sharp contrast to the first quarter's record US$24.68 billion first quarter surplus. A big piece of the explanation lies in the movements in the "assets held abroad" account.

Assets held abroad rose US$24.32 billion in the second quarter; in the first, they declined US$1.78 billion. Mexican foreign direct investment is one component of "assets held abroad". It was slightly higher in the second quarter than in the first (US$6.50 billion compared to US$5.00 billion). The big change was in deposits held in foreign bank accounts. In the first quarter, Mexicans repatriated US$6.66 billion. In the second quarter, they diversified the currencies in which they held their assets, sending US$17.18 billion to foreign bank accounts.