The Wall Street Journal reported this November that Mexico’s ‘local market is primed to continue booming.' This trend is fueled by Mexico’s consistent domestic growth, ample global liquidity and fixed income investment vehicles, which have encouraged traders to take on additional risk.
In addition, Mexico’s gross domestic product (GDP) is now expected to expand by at least 4 percent in 2012 and inflation remains low. Add to this the fact that the nation’s banks are stable and Mexico real estate is still a great bargain, and it’s easy to see why this country’s economy is poised to grow substantially over the next few decades.
“Manufacturing is strong and, an exchange official says, the competitiveness gap with China is closing,” writes the WSJ. “The Mexican exchange expects to see a series of initial public offerings and capital increases to meet heady demand as the benchmark IPC stock index holds near record levels.”
In 2012,Mexico’s IPC index has gained upwards of 11 percent, which translates to about 16 percent in terms of the dollar, and has been closing near its record high over the past few months. The Mexican Stock Exchange currently has close to 140 listed companies and market capitalization that is hovering close to $500 billion, which puts it in league with Brazil.
So far this year, the exchange has raised around $7 billion and currently represents more than 1.5 times the value of its listings over the past three years combined, according to Jose Manuel Allende, who is the head of strategic planning for Bolsa Mexicana de Valores, which operates the exchange.
“For next year, the sectors showing the most interest are real estate, financial and infrastructure,” Allende shared. “The energy-infrastructure subsector could show particularly rapid growth if a new energy law is passed by congress that allows for more private investment in the state-run oil and gas industry.”
In addition,Allende told the WSJ that Mexico’s stock exchange is well-diversified in its listings, with a good mix of large and medium companies in a variety of sectors, with manufacturing firms maintaining an even greater presence, due in large part to booming auto industry production.