The Mexican Stock Exchange shows the worst global performance in the last 12 months

The Mexican Stock Exchange (BMV) lost 23% of its value in dollars in the last 12 months. This represents the worst performance globally, Banco Santander said in an analysis.

"Brazil, the market with which Mexico rivals in terms of investment flow, has a gain of 26% in the last year, the best performance," said analysts at the institution Arturo Espinosa and Cecilia Jimenez.

They explained that Brazil's Bovespa had the best performance last year, with a rebound of its main indicator of 25.5%, followed by Russia, with 17.1%.

The main markets of Wall Street, such as the Dow Jones Industrial Average, which presented a recovery of 3.1%, had positive numbers.

The BMV lost 23.2%, followed by Chile with 16.1% and Spain with 12.1%. The losses of the Mexican stock market were higher than those of France, Japan, Argentina, and Germany, which also declined in the last 12 months.

"During the last month, the S&P/BMV IPC has registered a drop of 7.2% in pesos and 10.2% in dollars, to stand at 40,421.28 units (2,056 in dollars). During the last 12 months has recorded a decline of 20% in pesos and 24% in dollars," he said in the report.

Analysts noted that the "CPI has weakened much in the recent period and today is at its lowest level in the last five years, and, measured in dollars, is near its lowest level in the last 10 years.

For Santander, the future is not bright for the stock markets. "They remain vulnerable due to the relatively high valuation, so volatility is expected to continue in the short term," they wrote.

"It is advisable to follow a cautious investment strategy, privileging the protection of capital. In general, it is advisable to reduce exposure to shares and increase liquidity, while waiting for a better point of entry into the stock market.

There are several factors

Santander explained that several factors generally influence the outflow of capital from stock markets: lower economic growth, lackluster reports in the BMV, a possible downgrading of the rating to Pemex by Moody's, lack of certainty in public policies of the current administration in Mexico, and economic slowdown in the world, among others.

"The slowdown in the economy has translated into lower growth in company revenues and profits. In fact, company sales in the second quarter grew only 0.7% year-over-year. And the lowest growth in six years.

Operating cash flow grew 0.8% per year, the slowest growth in seven quarters, and net income fell 2.7% in the last 12 months.

They highlighted that in the last three years the performance of the Mexican Stock Exchange was lower than emerging markets in general and Latin America.

"The last three years the MSCI Mexico Index has fallen 15.2%, while the MSCI Emerging Market Index rose 17.8% and the MSCI Emerging Markets Latin America Index gained 21.9% in the same period," it said.

The analysis added that the Mexican market has a low valuation. But, it is justified by the economic slowdown and the absence of short-term catalysts, among others. For this reason, he said that stock markets will continue to be pressured and highly volatile.

Factors that generate a less positive environment for the CPI:

Downward revisions in the growth outlook for the Mexican economy.

The lackluster reporting season of the II Trim 19 in Mexico.

The possible downgrading of Pemex's debt rating by Moody's.

Lack of visibility around the public policies of the new administration.

Increasing trade tensions between the U.S. and China.

The global economic slowdown.

The difficulties of the T-MEC for its approval by the US Congress.

Gold, crude, corn, bitcoin, more profitable

If at the beginning of the year had been invested in oil, gold, foreign indices, grains or even bitcoin, would have a higher yield today than if betting on the Mexican Stock Exchange (BMV).

The main stock market indicator, the Index of Prices and Quotations (IPC) which includes the 35 most liquid companies in the local capital market, has a fall of 2.93% so far this year, from 41,640 points that ended the last trading day of 2018, to its closing of 40,421 whole last Friday.

The most important Wall Street indices have double-digit gains in the same period and have reached highs on different occasions. The S&P 500 has rebounded 16.43% so far in 2019, to close on Friday.

The Dow Jones has a rise in the year of 12.69% to its last quote of 2,918.65 points, while the technological NASDAQ Composite has advanced 19.95% to 7,959.14 units in the same period.

The West Texas Intermediate light crude reflects a return of 20.02% in 2019, to 54.5 dollars per barrel, compared to 45.41 dollars per unit that began the year, despite the fact that in recent weeks has been pressured by the trade war between the U.S. and China.

Gold accumulates to date yield of 16.72%, at 1,496.95 dollars per ounce. In the week even broke the barrier of 1,500 dollars per ounce, which had not happened for 6 years. According to data from the World Gold Council, central banks have also increased their ingot reserves in the last quarter.

The shares of Brazilian and Chinese firms also have on average a better performance this 2019. The Bovespa index, which groups around 60 Brazilian companies, has a yield of 18.33% to place itself at a level of 103,996 whole, while its counterpart in the Shanghai Stock Exchange has increased 11.26%, to 2,774.75 points.

The bitcoin gained, in the period, 217.40%, in 12,089.8 dollars per virtual currency. Even corn has an advance of 11.40%, to 417.75 cents per bushel.

Sources: Banco SantanderEl Economista

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