By Aida Pelaez-Fernandez

MEXICO CITY Latin America is increasingly seen as an attractive market for mergers and acquisitions (M&A), with the ongoing U.S.-China trade spat helping to whet investor appetite for opportunities in the region, a KPMG survey of executives showed on Monday.

The survey of nearly 400 executives across 14 countries globally showed technology, financial services and energy sectors leading the way and Mexico overtaking regional heavyweight Brazil for the top spot in M&A activity.

"Opportunities already outweigh challenges," said Gerardo Rojas, head of KPMG's Advisory Practice in Mexico and Central America. "The risks investors see in Latin America are outweighed by the desire to get out of Asia, particularly China, due to their trade war with the United States."

Nearly half of the executives who took part in the study said there had never been a better time for M&A opportunities in the region, even as risks still abound.

Investors are closely monitoring regional geopolitical and economic risks and could get spooked if they see a breakdown in the rule of law, governments nationalizing private firms or a lack of incentives for foreign investment, Rojas said.

Driven in part by its proximity to the U.S. and a nearshoring boom, Mexico was considered an attractive place to conduct business by 79% of the participants. That was followed by Brazil by 69% and Costa Rica by 54% of the participants, respectively.

"The effects of nearshoring have not yet reached their peak in Mexico," Rojas said, adding that mining powerhouses Chile and Peru could see investments in manufacturing rise.

Ignacio Garcia, KPMG advisory and strategy lead partner in Mexico, forecast the region would experience "more and better transactions" over the next 18 months though it still fall short of levels seen prior to the pandemic.

(Reporting by Aida Pelaez-Fernandez; Editing by Anthony Esposito and Rashmi Aich)