Benefiting from new free trade agreements along with lower energy costs, lower transportation costs, and lower labor costs compared to many other countries, Mexico is poised to the growth of manufacturing. As Mexico’s manufacturing sector grows, other areas of Mexico’s economy are expected to benefit as well, which may provide an opportunity for investors.
This is how to invest in Mexican stocks.
Key Takeaways: Buying Mexican Stocks
- The Mexican stock market is called the Mexican stock exchange. Mexican stocks can also be listed on many US stock exchanges. so are the stock markets.
- There are many benefits to trading Mexican stocks. These include faster growth, diversification of your portfolio, and other reasons we explore below.
- You need to find a broker that allows you to trade foreign stocks. Along with companies to watch, we take a look at their top picks for brokers to use when buying Mexican stocks.
what is the mexican stock market?
Mexico City is the center of stock exchange operations in Mexico in both the Mexican Stock Exchange, also called the Mexican Stock Exchange, Mexbol, Mexican Stock Exchange, or BMV (the largest stock exchange) as in the institutional stock exchange, also known as biva.
These two exchanges fulfill a function similar to the most well-known American exchanges, such as the New York Stock Exchange or the Nasdaq.
Both exchanges offer stock trading, as well as trading in other financial instruments. just like in the usa In the US, where the stock market is made up of several exchanges, the activity on both Mexican exchanges should be considered.
Trading on the Mexican exchanges is not much different than trading in the US. uu. Exchanges Similar trading options are available and exchanges are regulated by Mexico’s National Banking and Securities Commission (Comision Nacional Banca y de Valores, or CNBV).
Companies can list on only one exchange but they can list on both, and many non-Mexican companies are also listed on the exchanges, such as Citigroup (C) and Anheuser-Busch Inbev (ABI).
There are also a number of US-listed Mexican stocks. exchange houses, such as wal-mart de méxico or walmex (wmmvy), which is incorporated as a subsidiary of walmart that serves mexico and central american countries. america móvil (amov, amx), a leading provider of wireless services in latin america, is also listed on u.s. exchanges.
the economy of mexico has independent elements, but it also tends to follow a general trend with that of the us. uu. economy due to the close economic relationship between the two neighbors.
following a chart of the ipc index, which tracks mexican stocks, you might think you’re looking at a chart of the s&p 500 or nyse composite, complete with the market fading in 2008, followed by steady growth in the following years . To take full advantage of the continued growth of Mexico’s manufacturing and related industries, you may need to invest in individual Mexican companies or in highly focused indices .
just like with us to trade, you will need an online broker, but one authorized to trade on the Mexican stock exchanges.
pros and cons of buying Mexican stocks
The biggest draw to investing in Mexican and other foreign stocks is the opportunities for faster growth than you might find with similar US-based companies. uu. and the possibility of diversifying beyond the us. uu. companies.
Investing in Mexican stocks has its pros and cons, as well as a few things you simply need to consider before making a financial commitment.
- Potential for faster growth: As part of an emerging market driven by lower energy and labor costs, Mexican companies may offer an opportunity for outsized returns.
- diversification: investing in a single sector carries risks. On a larger scale, investing in a single country also has risks. Investing in Mexican stocks provides a unique form of diversification not available only with US-based investment types.
- United States-Mexico-Canada Agreement (USMCA): NAFTA’s replacement puts Mexico on an equal footing with larger economies and is expected to benefit Mexican businesses and workers, possibly giving a boost to the broader economy.
- Economic Risk: Mexico’s GDP growth has been generally steady, but economic growth unexpectedly turned negative in the first quarter of 2019, a reminder that growth in the emerging markets is not always guaranteed .
- political risk: risk due to political factors can take several forms. As in the United States, the markets can be moved by uncertainty and by the actions of governments, which in the case of Mexico may be the government of Mexico or the United States. government actions.
- exchange risk: investing in emerging markets can mean exchange risk, in which transactions are made in pesos and then have to be converted back to dollars, which which may possibly reduce the value of the trade due to currency price movements.
- Liquidity risk: even within the us. uu. stock market, the largest in the world, there are sectors of companies that are not always easy to get out of. This risk is even more common in emerging markets where sellers may not find many buyers at a given price. choosing stocks of larger companies tends to reduce liquidity risk.
how to buy mexican stocks
there are multiple ways to start investing in mexico. The easiest is to buy an exchange-traded fund (ETF), which pools a series of stocks or tracks an index. While it offers diversification and a low barrier to entry, the downside of the ETF approach is that your returns may be lower than if you were to invest in individual companies through a broker.
best brokers online
here are some of our favorite brokers that allow you to invest in Mexican stocks.
claim exclusive offers
Mexican companies to watch and future market outlook
walmex, or walmart de mexico, is the largest walmart subsidiary outside of the united states. and it is the largest private employer in mexico. share prices have almost doubled since 2015.
shares of cemex, the second largest cement company in north america, are testing the lows last seen in early 2016. is this the time to buy? it all depends on the type of investor you are, including your tolerance for risk and your willingness to investigate trading opportunities.
Mexico’s stock markets and equities should continue to stabilize, ultimately rewarding investors who do the necessary research and those with a steady hand.
While you choose the companies to target, you can still benefit from Mexico’s improved economic prospects through a series of ETFs, gradually moving to a portfolio tailored to your risk profile and long-term growth goals.
start buying Mexican stocks
It is impossible to time the market with 100% accuracy. start and gradually increase when you start investing. take your time learning how to invest in stocks, ideally using a demo account. take notes on what works and what doesn’t work so well, but also keep track of how your choices would have performed if given a little more time. you can apply the lessons you have learned to your live trading and improve your overall trading skills.
Do you want to expand your portfolio to include foreign companies? learn more about buying foreign stocks, including how to invest in the Japanese stock market and everything you need to know about investing in the stock market london values.