MEXICO CITY (Reuters) – Mexican stocks are drawing investors away from Brazil as Latin America’s biggest economy loses steam and Mexico’s close ties to the United States render it a safer bet in unsettled times.

Although the market capitalization of Brazil’s bourse is three times that of Mexico’s, the Mexican stock market’s standing with fund investors has been on a slow and steady rise since the end of last year, according to data from EPFR Global, which tracks funds with $16 trillion in global assets.

Slow and steady economic growth, at an annual rate of 3 to 4 percent, is also earning Mexico a second look from those with money to invest in the region despite renewed fears about the future of the euro zone and the chance of a Lehman-style global crisis.

Mexico, which has resisted the temptation to change interest rates, intervene in currency markets or battle capital inflows in recent years, is in part benefiting from Brazil’s unsettling changeability in key policy areas as well as its own ties to the perceived ‘safe haven’ of the United States.

As risk aversion has flared again this year, Brazil’s exchange suffered a bigger hit than Mexico’s, suggesting investors may be more willing to hold on to Mexican stocks in crunch times. First-quarter foreign inflows into Mexican stocks were the largest since the third quarter of 2009.

“Recently I find that we have been putting more money to work in Mexico at the expense of Brazil,” said Ed Kuczma, investment analyst for two Van Eck emerging market equity funds which had $275 million assets under management as of April 30.

“I think investors are starting to see a kind of top-down, favorable macro environment for Mexico and a more challenging environment for Brazil.”

MEXICO CITY (Reuters) – Mexican stocks are drawing investors away from Brazil as Latin America’s biggest economy loses steam and Mexico’s close ties to the United States render it a safer bet in unsettled times.

Although the market capitalization of Brazil’s bourse is three times that of Mexico’s, the Mexican stock market’s standing with fund investors has been on a slow and steady rise since the end of last year, according to data from EPFR Global, which tracks funds with $16 trillion in global assets.

Slow and steady economic growth, at an annual rate of 3 to 4 percent, is also earning Mexico a second look from those with money to invest in the region despite renewed fears about the future of the euro zone and the chance of a Lehman-style global crisis.

Mexico, which has resisted the temptation to change interest rates, intervene in currency markets or battle capital inflows in recent years, is in part benefiting from Brazil’s unsettling changeability in key policy areas as well as its own ties to the perceived ‘safe haven’ of the United States.

As risk aversion has flared again this year, Brazil’s exchange suffered a bigger hit than Mexico’s, suggesting investors may be more willing to hold on to Mexican stocks in crunch times. First-quarter foreign inflows into Mexican stocks were the largest since the third quarter of 2009.

“Recently I find that we have been putting more money to work in Mexico at the expense of Brazil,” said Ed Kuczma, investment analyst for two Van Eck emerging market equity funds which had $275 million assets under management as of April 30.

“I think investors are starting to see a kind of top-down, favorable macro environment for Mexico and a more challenging environment for Brazil.”