How to invest in the Mexican market - ETFs, Shares, Indices [Guide]

The Mexican market is one of the most important in Latin America. There are two exchanges in Mexico: Mexican Stock Exchange (BMV) and Bolsa Institucional de Valores (BIVA). The BMV stock exchange is much older and its traditions date back to the 1975th century. However, the modern history of Bolsa Mexicana de Valores began in 1999, as a result of the merger of three exchanges operating in Mexico: Bolsa de Valores de México, which operated in Mexico City, Bolsa de Occidente of Guadalajara, and Bolsa de Monterrey. In 2014, a platform enabling electronic commerce was established. Another milestone in the development of BMV was joining the alliance of South American exchanges MILA (Mercado Integrado Latinoamericano) in XNUMX. MILA groups stock exchanges such as: Santiago Exchange, Colombia Stock Exchange, Lima Stock Exchange.

READ NECESSARY: Mexico - one of the largest economies in Latin America

The BMV exchange offers trading in stocks, futures, bonds, ETFs and structured products. According to data World Bank Mexican stock market capitalization is over $ 410 billion.

IPC 35 index - mainly old economy

The main index of the Mexican stock exchange is the S & P / BMV IPC, i.e. Indica de Precios y Cotizaciones, which groups the largest and most liquid companies  mexican market. The IPC consists of 35 components. Only companies listed on the Bolsa Mexicana de Valores may be included in the index. They are excluded from the index REITs known in Mexico as FIBRA. 

CPI 35

The index was established in 1978. According to data collected by S&P Dow Jones Indices, the average capitalization of the company was 152 billion MXN. In turn, the median was MXN 83,8 billion. The index did not provide high rates of return. According to S&P DJI data, the average annual rate of return (after dividends) was around 3,6%.

MEXComp chart (CFD based on the IPC 35 index), interval W1. Source: xNUMX XTB.

The index is dominated by companies included in the consumer goods sector according to GICS. Companies of this type account for 31% of the index. Another important component of the index are companies from the "materials" sector according to the GICS methodology. One of the representatives of this sector in the index is the Mexico SAB de CVB Group, which deals, inter alia, with mining of copper.

The range of enterprises included in the IPC index is very wide. There you can find the Mexican branch of Walmart, a stock exchange operator or airport operators. Selected companies from the IPC index are presented below.

Walmart de Mexico SAB de CV (Walmex)

It has been listed on the Mexico Stock Exchange since 1977. It is the largest foreign branch of the American supermarket chain Walmart. At the end of Q2020 3450, the company had over 200 stores in Mexico and other Latin American countries. The company employs approximately 000 people. Walmex is the largest retail chain in Latin America. Over the years 2009-2019, the company generated an average revenue increase of 9,1%. In turn, EBITDA increased by 10,2% at the same time. The company's capitalization exceeds MXN 1 billion.

Megacable Holdings SAB de CV

It is a leading Mexican telecommunications operator. It offers its customers access to cable TV, the Internet and phones. In 2019, the company had 3,097 million subscribers of internet services, 2,13 million customers using telecommunications services and 3,2 million subscribers using video streaming services (e.g. the xview platform). About 78% of the company's revenues come from the mass market (retail).

Kimberly Clark de Mexico SAB de CV A

It is a "daughter company" of the American corporation Kimberly-Clark. The company sells nappies in Mexico, tissues, shampoos, soaps and toilet paper. In Mexico, it sells products under brands such as Huggies, Cottonelle, Kotex and Kleenex. The company's capitalization exceeds 107 billion MXN.

Grupo Aeroportuario del Pacifico, SAB de CV (GAPB)

It is the second largest airport operator in Mexico. GAPB manages 12 airports mainly in the western regions of Mexico. Among them are, among others Guadalajara, Tijuana and the popular tourist destinations of Los Cabos and Puerto Vallarta. The five airports operated by GAPB are among the top ten largest airports in Mexico. Two of them (Guadalajara and Tijuana) are placed 3rd and 4th. In 2019, GAPB handled less than 49 million passengers at its airports.

Bolsa Mexicana de Valores S.A. de CV

It is the operator of the largest stock exchange in Mexico and the second largest stock exchange in Latin America (behind Brazil). In addition to enabling trading on the stock, bond or derivative market, the company also provides clearing services. Bolsa Mexicana debuted on the stock exchange in 2008.

ETFs for the Mexican market

Development, ETF market resulted in an investor not having to invest in individual companies in order to have exposure to a developing market of his choice. The purchase of an ETF solves another problem which is that not every broker offers trading on this market. This is important information as not all large Mexican companies are listed on other markets (e.g. the US). For this reason, you can take advantage of the offer of ETFs, which will facilitate the decision-making process.

The largest ETF for investing in Mexican companies is iShares MSCI Mexico ETF. It has over $ 1,1 billion under management. The ETF was established in 1996 and its benchmark is the MSCI Mexico IMI 25/50 Index. The management fee is 0,51% per annum. The average spread is at 0,02%. Companies from the consumer goods and telecommunications industries dominate, with over 50% weight in the ETF. Top 5 as of February 05:

IShares MSCI Mexico ETF Chart, Interval W1. Source: xNUMX XTB.

You can also invest in ETFs in which Mexican companies have a large share. Examples include:

iShares Latin America ETF

• • Issuer: Blackrock
  • Annual fees: 0,74%
  • Average Spread: 0,14%

The fund invests in Brazilian, Mexican, Argentinean, Chilean, Peruvian and Colombian companies. The ETF consists of 106 companies. The largest share is held by Brazilian (approx. 55%) and Mexican (approx. 22%) companies. Companies from the financial sector (31,5%) and the materials industry (18,5%) dominate. Technology companies account for only 1,7%. Assets under management (AUM) ended February 5, $ 486 million. The fund's benchmark is the MSCI EM Latin America 10/40 Index.

IShares Latin America ETF Chart, Interval W1. Source: xNUMX XTB.

Lyxor Latin America ETF

• • Issuer: Lyxor
  • Annual fees: 0,65%

The ETF invests mainly in Brazilian companies (approx. 64%) and those listed in Mexico (approx. 22%). Peruvian, Chilean, Colombian and Argentinian companies have smaller shares. In total, the fund includes 104 enterprises. In ETF, companies from the financial sector have the largest exposure (24%). The next largest sector is the raw materials sector (22%). At the end of February 5, the assets under ETF management were € 41m. The fund's benchmark is the MSCI Daily TR Net Emerging Markets Latin America USD index.

Lyxor Latin America ETF Chart, Interval W1. Source: xNUMX XTB.

Where to invest in ETF

More and more forex brokers have a wide range of ETFs on offer. For example on XTB today we can find over 400 instruments of this type, in Admirals almost 397, a Saxo Bank almost 3000.

Broker
End	Poland	Denmark	Great Britain / Cyprus
The amount of ETF on offer	approx. 400 - ETF approx. 170 - CFDs on ETFs	3000 - ETF 675 - ETF CFDs	397 - ETF CFDs
Min. Deposit	PLN 0 (recommended min. PLN 2000 or USD 500, EUR)	0 PLN / 0 EUR / 0 USD	PLN 5
Platform	xStation	SaxoTrader Pro Saxo Trader Go	MetaTrader 5
	REVIEW	REVIEW	REVIEW
	CREATE AN ACCOUNT	CREATE AN ACCOUNT	CREATE AN ACCOUNT

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

Mexican market - Summary

Mexico is a developing country with a small number of technology companies. The economy is very closely linked to the US economy and has little exposure to Asian markets. The main ICP 35 index is dominated by companies from the "old economy". Several companies that are branches of American corporations (eg Walmart, Kimberly Clark, Coca-Cola) are listed on the stock exchange. At the same time, you can find companies related to the production of consumer goods (Gruma, Arca, Becle, Bimbo) or those related to the chemical industry (Orbia). The Mexican Stock Exchange is an interesting idea for an investor looking for exposure on the Latin American market. However, one should remember about the currency, political and macroeconomic risks that are associated with investing in foreign markets.