In recent years Mexico has enjoyed the healthiest economy in Latin America, with a GDP growth rate higher than the U.S., a middle class that is developing at a historic rate, and a good degree of political stability. The Mexican government is also making promising structural economic changes, such as allowing international investment in the energy sector for the first time in over 70 years. Over the past decade, Mexico has become more integrated with the rest of North America, helping to form a NAFTA economic block that is able to compete with the Asian economies as an efficient production center.

Brazil is undergoing a political and economic crisis, which is creating unique challenges and opportunities. A critical issue for the interim government (which could turn into a permanent government if President Rousseff is impeached) is how to rebuild investors’ confidence in the country’s economy.

On the corporate side, the major challenge facing Korea is to find new growth engines and markets in response to slowing growth in domestic and global economies. Korean companies are exploring new high-growth industries, such as biotech, electric cars, internet and mobile services, and renewable energy, in response to the slowing demand in traditional industries. Korean companies face difficult strategic decisions regarding these new businesses, primarily whether they should grow them organically or through M&A, and how to raise capital for these new businesses. At the same time, Korean companies also face the challenge of restructuring their existing businesses that are not competitive in the global markets. In the event that Korean companies engage in or pursue vigorous restructuring, there may be investment opportunities for our private equity clients or advisers who work with businesses to restructure distressed assets.

The pace of Chinese outbound M&A is clearly accelerating, with the U.S. remaining the most stable and desired destination for Chinese companies looking to hedge against domestic asset devaluation and support business and technological growth. This aligns with government policy to prioritize and support development of certain sectors, particularly technology.

Chinese investors and businesses operating in China have been facing challenges from the slowing Chinese economy, recent stock market turmoil, and devaluation of the yuan, as well as unpredictable regulatory interventions. Domestic market uncertainty has driven Chinese enterprises to accelerate their investments abroad to diversify risks. Chinese companies are aware that in today’s international low growth environment, competition for quality investments is intensifying. Nonetheless, we see increasing outbound opportunities in the next 12 months as the government continues to ease investment restrictions in line with its long term strategy to nurture private enterprises and encourage them to invest abroad.