Mexican stock market goes for its best year in a decade

The Mexican stock exchange (BMV) is shaping up its best year in more than a decade, due to the economic reactivation, the rapid recovery in the profitability of companies and the appetite of investors for positive real returns in the face of growing inflation.

The Stock Exchange Price and Quotation Index ended last Friday at 52,853 points and accumulates an increase of 19.9% ​​during the year.

This is the largest annual profit since 2010, when it added a profit of 20%.

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Even if the main stock market indicator of the country continues to climb in the next five days, it can accumulate a return of more than 20%, which has not been seen since 2009, when it soared 43.5%.

The Mexican stock market is located less than 500 units from the historical closing of 53 thousand 305 points established on August 31.

The Mexican stock market will show the second best performance in Latin America this year, only behind the 65.6% rise reported by the Buenos Aires stock market, Argentina. In other words, the square is above its peers in Sao Paulo, Santiago, Bogotá, Lima, Quito and Caracas.

Of the 35 companies most traded on the stock market, the telecommunications giant América Móvil stands out, with an accumulated profit of 48.6% in the year. They are followed by the restaurant operator Alsea, with 47.2%; and the airline Volaris, with 45.6%. The latter entered the Price and Quotation Index on September 20.

The Mexican stock market was favored by the reactivation of the national economy and the rapid recovery in the profitability of companies during this year, explained Gerardo Copca, analyst at MetAnálisis.

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“An economic growth of 5% or 6% is not bad, in addition, the country has sound public finances, which is something that others like Brazil do not have, “said the analyst in an interview.

Copca explained that, behind the good performance of the stock market, inflation was also found, because market participants opted for the risk involved invest in variable income assets, in order to obtain positive real returns, as other markets presented negative rates when discounting the rise in prices.

Analysts estimate that inflation will end this year at 7.7%, its highest closure since 2000.

At the end of last year, financial experts agreed that the Mexican stock market “was cheap” and, since then, companies have managed to recover quickly.

From Copca’s perspective, the Mexican stock market has the potential to rise around 8% in nominal terms during 2022 and around 3% at the real rate, that is, discounting inflation. This implies that the financial market will record new all-time highs next year.

Banorte analysts believed that the expectation of recovery and an attractive valuation level, particularly due to a cost of risk that remains attractive, boosted the Mexican stock market during this year.

They highlighted the strategies implemented by companies to increase profitability after the sharp contraction of the economy in 2020 that caused the Covid-19 pandemic.

In the United States and Europe, stocks reached their all-time highs just last week and are shaping up to a close to 2021 with strong returns.

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