Foreign investment in the Mexican Stock Exchange grows 5.4%

Foreign entrepreneurs have greater confidence in the Mexican economy than nationals
Foreign entrepreneurs have greater confidence in the Mexican economy than nationals

During the first quarter of the year, the investments of foreigners in the Mexican Stock Exchange (BMV) increased two thousand 260 million dollars, which represented an advance of 5.4 percent, in relation to the closing of the previous quarter, despite the forecasts of lower economic growth and the business environment.

According to Citibanamex, this was the second best result for the first quarter since it began registration in 2010.

The increase occurs despite the fact that the Price and Quotation Index (IPC), which groups the 35 largest companies in the Mexican stock market, was three thousand points below its level at the end of March of the previous year.

Of the total resources invested in the stock market, foreigners represent 34.5 percent of the total, while they cover 52.7 percent in proportion to the value of the Price and Quotation Index, which brings together the 35 most important companies within the market.

The increase in the flow is a consequence of a lower aversion to risk to emerging markets, a weakening of the dollar, the Federal Reserve announcements that it expects to keep the benchmark interest rate in the United States this year, as well as the prices of the shares of Mexican companies, which are attractive.

"Although the current business environment in Mexico has improved, it is still not the desired one and the local risks still continue. Foreigners maintain their vote of confidence, which has not permeated local investors."

However, he warned that the decisions taken by the federal government are "fundamental for this confidence in Mexico to be widespread."

Foreign investors keep their vote of confidence in Mexico

The Analysis Department of Citibabanamex explained that one of the factors for foreigners to continue to bring flows to the local stock market is a less strong dollar.

In the first quarter of 2019, foreigners continued to bring flows to the Mexican stock market, and the performance of the index recognized it with a 5.4 percent growth in dollars in the period, which reflects that this sector continues to give its vote of confidence to the country. Making the best decisions on the part of the Government plays a fundamental role so that this trust in Mexico is widespread.

In the first quarter of this year, foreigners invested in the stock market additional flows for two thousand 160 million dollars, which represented the second best first quarter since the institution has recorded, only exceeded by the two thousand 327 million dollars of the first quarter of 2017.

The value of the position of foreigners amounts to 34.5 percent in proportion to the total market value of the Exchange or 52.7 percent in proportion to the market value of the index.

"The lower aversion to risk to emerging markets at the beginning of 2019 and the attractive valuation of many Mexican securities are the probable factors of these solid flows of foreigners to the stock market." 

The financial institution explained that the factors for foreigners to continue to bring flows to the local stock market could be the lower aversion to risk to emerging markets, a less strong dollar, attractive valuation of many Mexican securities and a more passive position of the Federal Reserve. of the United States.

"Although the current business environment in Mexico has improved, it is still not the desired one and the local risks still continue. Foreigners continue to give their vote of confidence, trust that has not permeated local investors."