A Guide to Mexican Investing

by: World Market Pulse

Mexico was in the international headlines for all the wrong reasons last year after the deadly outbreak of the H1N1 flu virus that sparked a global pandemic closing schools and businesses for two weeks in the country. The outbreak not only resulted in a big drop in tourism revenue but also came as a major blow to a Mexican economy that had been already gripped by the effects of the global financial crisis.

Mexico's capital market activity has hence slowly picked up from the lows of 2009 and is slowly but surely moving towards an economic resurgence. Testimony to the fact is that the Mexican economy has rebounded in the first quarter of this year, expanding more than 4 % from a year earlier after contracting 2.3 % in the last three months of 2009. With as many as six Mexican companies looking to go public this year, a rise in the Mexican IPO activity might just be the catalyst for speeding up the country's economic growth. Private-sector economists believe that Mexico is likely to grow at 4.2 % this year resulting in a strong rally in the BMV’s benchmark IPC index, which hit an all-time high of 34,134 points on April 15. During the past 12 months, the index has gained almost 50 % in value.

Before discussing the possibilities of investing in Mexico or including Mexican stocks in your investment portfolio, it's important to understand the new dynamic changes at the Bolsa Mexicana de Valores or the Mexican Stock Exchange after it successfully offered its shares to the public and became a listed company on 13 June 2008. More than 13,600 individual investors bought shares in the IPO, making BMV a widely held public company. BMV (the company) trades on the Mexican Stock Exchange under the ticker code BOLSAA for it’s A shares. BMV is an actively traded stock, and from 1 February 2009 its A shares were included in the BMV's own IPC index of the top 35 Mexican stocks for the first time.

Overview Of The Mexico Stock Exchange:

The Bolsa Mexicana de Valores, also referred to as BMV or the Mexican Stock Exchange, is the chief stock exchange in Mexico. Located in Mexico City at Paseo de la Reforma, BMV is a private limited company. Shareholders of Mexico's stock exchange are all brokerage firms. BMV trades in debt instruments such as CETES (Federal Treasury Certificates); investment unit bonds, BONDES (federal government development bonds); Bankers acceptances, development bank bonds, warrants, debentures, stocks, mutual fund shares and so forth. The BMV-SENTRA Equities System allows for trading to take place electronically.

The Mexican Stock Exchange deals with 13 indices of stock prices. The IPC or Índice de Precios y Cotizaciones is the benchmark stock index and is the widest indicator of the stock market's complete performance. A number of companies are listed with the Bolsa Mexicana de Volores. Amongst the top companies on Mexico's Stock Exchange are Cemex (cement maker); América Móvil (wireless communications); Telmex (telecommunications); Televisa (media) and Grupo Corvi (consumer products distribution).

Largest Mexican Companies Listed On The Mexican Stock Exchange

  • Agriculture: GAM (Grupo Azucarero Mexicano)
  • Food: Bimbo, Grupo Industrial SA de CV, CAZE (Consorcio Industrial Escorpion), Cuauhtemoc, FEMSA, GIMSA Grupo Industrial Maseca, Gruma SA de CV, Herdez, Grupo S. A. de C. V., Industrias Bachoco, Latinlac / Evamex, Lomeli Grupo, Machado, Maizeno, Minsa Grupo, Modelo Grupo, Ponce Garcia Grupo, Pureza Aga, Santos SA de CV, Savia, Sigma Alimentos,
    Insurance: Meximed
  • Automotive & transport: Casa Grupo Industrial, Desc, S.A. de C.V., Dina Grupo, Quimmco SA de CV, Saltillo Grupo Industrial, SANLUIS Corp
  • Banking: Banacci ex-Banamex-Accival, Bancen, Banco Inverlat, Banco Nacional de Mexico, Bancomext (Banco Nacional de Comercio Exterior), Banoro, Banorte Grupo Financiero, Banpais (Banco del Pais), Banrural, BBVA Bancomer, BBV-Probursa, Bital (Banco Internacional), Nacional Financiera, Serfin Grupo Financiero
  • Wood & paper products: GIDUSA Grupo Industrial Durango
  • Chemicals: Anaversa, Celanese Mexicana SA de CV, Inda (Industrial de Acabados)
  • Consulting: ICA (ingenieros civiles associados)
  • Construction: Apasco SA de CV, CEMEX (Cementos Mexicanos), Consorcio ARA, S.A. de C.V, Corporación GEO, S.A. de C.V., Cydsa Grupo, GUTSA, Pacific Airports, Pulsar Grupo, Sidek-Situr Grupo, Tribasa Grupo
  • Retail: Cifra Grupo, Comerci, Comercial Mexicana, Corvi, Grupo S.A. de C.V., Elektra Grupo S.A. de C.V., Farmacias Similares, Gigante, Nadro (Nacional de Drogas), Sanborns Grupo, Soriana
  • Energy & water: Aguas de Cancun, Aguas de Mexico, Aguas Negras de Puerto Vallarta, Altamira, Azurix Cancun, CAASA concesionaria de agua de aguascalientes, Comision Federal de Electricidad, DiGaNEM, Digaqro, Ecomex, IACM, IASA, Merida, Mexigas, Omsa, PEMEX (Petroleos Mexicanos), Samalayuca, Tamaulipas, Tecate, Tecsa
  • Conglomerate: ALFA SA de CV, Carso Grupo, ECE Grupo, Fernandez Grupo
  • Equipment: Mexichem SAB, Salinas y Rocha, Vitro, S.A. de C.V.
  • Real estate: Accion Grupo, Divisa (Desarrollo Immobiliario Via)
  • Media: Televisa Grupo SA, TV Azteca
  • Metals & mining: AHMSA (Altos Hornos de Mexico SA), G-Mex (Grupo Mexico), Hylsamex SA de CV, Imsa Grupo, Industrial Minera Mexico, Industrias Penoles, Nacobre SA, Simec Grupo, TAMSA (Tubos de Acero de México), Techsur
  • Health care: Casa Autrey, Grupo S.A. de C.V., Casa Saba, Grupo, K2 Grupo
  • Telecommunications services: America Movil, Bajacel (Baja Celular), Carso Global Telecom, Cedetel (Celular de Telefonia), Lusacell Grupo, Movitel, Norcel, Pegaso Telecomunicaciones S.A, TelMex (Telefonos de Mexico), Unefon
  • Transportation services: Aeroejecutivo, Aeromexico, Estrella Blanca, Ferrocarril del Sureste, MASA (Mexicana de Autobuses), Mexicana Airlines, SACSA, Volaris
  • Financial services: Credimex, Grupo Promotor de Inversiones de Mexico, Inbursa Grupo Financiero, Interacciones, Grupo Financiero, Jorisa Grupo, Valores de Monterrey
  • Tobacco: Cigatam
  • Tourism: Mexitlan, Rincon Sabroso
  • Apparel: Canada, Grupo Calzado, Copamex, Synkro Grupo SA
  • Holding: Arzac Grupo, Asemex Grupo Financiero, Cintra Grupo - Corporación Internacional de Transporte Aéreo, Corfuerte / Hernandez Alvarez, Grupo Mexicano de Desarrollo, Infomin Grupo, Inmobiliario G, Grupo, Multiva Grupo Financiero

Mexico has many family owned businesses that are actually very large conglomerates and some large companies are still family owned. Some of the biggest high net worth individuals and business families include: Alfredo Miguel Afif, Angel Rodriguez, Aramburuzabala, Maria Asuncion, Arango, Jeronimo, Azcarraga (family), Bailleres, Alberto, Ballesteros (family), Barrón, Carlos, Cervantes (family), Enrique Molina Sobrino, Fernando Ponce Garcia, Garza Laguera, Eugenio, Garza Sada, Gomez Flores (family), Guajardo, Guillermo González, Guillermo Martínez Güitrón, Gutierrez Cortina (family), Hank González, Carlos, Hernandez, Roberto, Jaime y Julio Souza, José Luis Rión Santisteban, Justo Félix Fernández López, Lomelí (family), Luis Germán Cárcoba García, Magnani, Miguel Alemán, Mariano Mariscal Barroso, Martin Bringas, Ricardo, Maza (family), Peralta, Carlos, Ricardo González Cornejo, Romo Garza, Alfonso, Saba Raffoul, Isaac, Sada Tomas Gonzalez (family), Salinas Pliego, Ricardo, Sandra López Benavides, Slim Helu, Carlos, Valadés (family), Vazquez Rana, Victor Gonzalez Torres, Villa Manzo (family), Villasenor Zepeda, Lorenzo Zambrano

For those wanting to invest in Mexico from the US, here's a list of the US-listed Depository Receipt programs listed and traded on the NYSE.

  • Majority of Mexican stocks follow their own fundamentals but there is a good reflection of market trends and momentum on most, of general NY Stocks.
  • If one analyzes technically many of the Mexican Stocks and ADRs follow the general market trend but a few Stocks and ADRs are bullish for their own fundamental reasons, e.g.: Wal-Mart de Mexico (OTCQX:WMMVY) usually mimics Wal-Mart (NYSE:WMT) but at times it can have its own momentum following general Mexican market.

Mexican Companies Listed On NYSE

1: America Movil (NYSE:AMX)
: is a leading Mexico-based communications services provider in Latin America. The company provides fixed-line, wireless, and cellular telecommunications service under the Telcel, Claro, CTI M, Comcel, Codetel, PRT, and Porta brand names. The company also offers voice services and data services, including short message services, content services, and Internet

2: Grupo Aeroportuario Del Sureste (NYSE:ASR): is a Mexican airport operator with concessions to operate, maintain and develop nine airports in southeastern Mexico. The company holds 50-year concessions, beginning in 1998, to manage airports in Cancun, Cozumel, Merida, Oaxaca, Veracruz, Huatulco, Tapachula, Minatitlan, and Villahermosa.

3: Telmex Internacional (TII): is a Mexican holding company providing through its subsidiaries a wide range of telecommunications services. The Company's services include voice, data and video transmission, Internet access and integrated telecommunications solutions; pay cable and satellite television; and print and Internet-based yellow pages directories.

4: Grupo Televisa (NYSE:TV): is the largest media company in the Spanish-speaking world and a major player in the international entertainment business. It has interests in television production and broadcasting, programming, direct-to home satellite services, publishing and publishing distribution, cable television, radio production, show business, feature film and Internet portal.

5: Telefonos de Mexico (NYSE:TMX): is a telecommunications service provider. The company provides fixed-line telephony services, as well as fixed local and long distance telephone services. Telmex offers voice, data and Internet services in Brazil, Argentina, Chile, Colombia and Peru. In addition, it provides cable television services in Brazil (through an affiliate) and Colombia, and telecommunications services in Ecuador.

6: Grupo Simec (NYSEMKT:SIM): produces steel. The company operates structural steel mini-mills located in Guadalajara and Mexicali. Simec produces non-flat steel products and specialty steel products for the residential, commercial, and industrial construction industries.

7: Grupo Aeroportuario del Centro Norte (NASDAQ:OMAB): operates international airports in the northern and central regions of Mexico. The airports serve Monterrey, Acapulco, Mazatlan, Zihuatanejo and several other regional centers and border cities.

8: Coca-Cola Femsa (NYSE:KOF): is a Mexico-based bottler of beverages. The company trades in Coca-Cola trademark beverages, its own brands, and brands licensed from third parties. KOF's beverage segments include colas, flavored drinks, water and non-carbonated beverages such as juices and isotonics. The company operates in Mexico, Guatemala, Colombia, Costa Rica, Panama, Venezuela, Argentina and Brazil, and has 206 distribution centers located across Latin America.

9: Industrias Bachoco (NYSE:IBA): is a poultry company in Mexico. The company's main products lines include chicken, eggs, balance feed and swine. Bachoco is a vertically integrated company, with a national distribution network as well as processing plants throughout Mexico. The company's operations include preparing feed, breeding, hatching and growing chickens, and processing, packaging and distributing chicken products. Industrias Bachoco is headquartered in Celaya, Mexico.

10: Desarrolladora Homex (NYSE:HXM)
: operates as a vertically integrated home builder. The company purchases tracts of land, designs, constructs and markets homes for the lower and middle income markets, and assists clients with obtaining mortgages.

11: Cemex (NYSE:CX): produces, distributes, and markets cement, readymix concrete, aggregates, and clinker. It is one of the three largest global producers.

Apart from investing in individual stocks and ADRs of Mexican companies listed on NYSE, one can also invest in Mexico through various Exchange Traded Funds.

Mexico Outlook 2010 And Beyond:

For the year 2010, the growth figures pertaining to the Mexican economy indicate signs of a recovery. The Mexican Finance Ministry has increased the growth figures from 3% to 3.9%. This upswing was the result of significant improvement in Mexico’s exports, automobile production, manufacturing and increased imports of consumer goods. Employment is also on the rise alongside an increase in foreign and domestic demand, despite a deep divide in economic distribution, where 32% of the top earners take in 55% of the country’s total income. In January 2009, President Calderon, in order to prevent layoffs, has added $150 million in Mexican economic stimulus package. Companies have been given an income tax relief of 3% and a reduction of 20% in electricity rates as part of economic stimulus package to Mexico.

The Mexican economy has its pitfalls, most notably the over-concentration of its markets in a few big names, and drug-related lawlessness along the U.S.-Mexican border. Still, this diverse economy, with its rich natural resources and manufacturing might offers investors a different take on the Latin American story.

Disclosure: No positions