Guide to Stock Investment on Mexican Stock Exchange (BMV)
It is well known that the shares of companies such as Amazon, Netflix and Zoom are the big winners in the wake of the arrival of COVID-19.
However, other options, such as the one offered by Mexican broadcasters, are worth exploring.
Do you know how the Mexican stock market operates? Would you give Mexican stocks a shot?
If you are looking for new investment opportunities, it will probably be interesting for you to learn more about Mexican stocks and what their buying process is like.
What is the Mexican Stock Exchange (BMV)?
Contrary to what most believe, the Mexican Stock Exchange (BMV) is a private financial entity that operates by concession from the Ministry of Finance and Public Credit, in accordance with the Securities Market Law.
It is a private organization that allows its members to negotiate the purchase and sale of securities – shares of corporations or public limited companies, public and private bonds, certificates, participation titles and other investment instruments.
Thus, the BMV operates in the same way as powerful world stock exchanges, under absolute legality and transparency, such as the New York Stock Exchange (NYSE, in English).
As of December 31, 2019, the BMV published in its annual report its list with 139 Mexican and five foreign issuers, excluding the securities listed in the Global Market, plus 459 Investment Funds and 117 SIEFORES.
On the other hand, the total market capitalization of national issuers at the end of 2019 was $ 7.830 trillion pesos.
Located as the second most important stock exchange in Latin America, preceded only by the Sao Paulo Stock Exchange, its Price and Quotation Index (IPC) – like the Dow Jones and NASDAQ, depending on its focus and specialty – is an Indicator that seeks to reflect the behavior of the Mexican stock market as a whole, or of different groups of companies with some characteristic in common.
Within the issuers of the Mexican Stock Exchange, there is a block of Mexican companies that are also listed on the United States stock exchanges through American Depository Receipts (ADRs).
These are priced and traded in US dollars, like any other security in that country and, therefore, increase investor confidence when investing in them.
Currently, 13 Mexican issuers are listed on the United States stock exchanges in the form of ADRs from the financial, tourism, telecommunications, construction, beverages, transportation, entertainment and food sectors.
So if investing in Mexican stocks is in your plans, it would be a good idea to learn about the following issuers:
1. América Móvil SAB de CV.
Holding provides telecommunications services in approximately 30 countries.
Its telecommunications services include fixed-line and mobile voice services, fixed and wireless data services, Internet access and pay television, sale of equipment, accessories and computers, as well as other related services.
2. CEMEX SAB de CV.
Operating and a holding company dedicated to the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates, clinker and other construction materials throughout the world.
It has operations in Mexico, the United States, Europe, South America, Central America, the Caribbean, Asia, the Middle East, and Africa.
3. Grupo Televisa SAB.
A media company that distributes the content it produces through various transmission channels in Mexico and in more than 50 countries.
It owns Sky, a DTH satellite pay television system; an editorial; a producer of radio, professional sports and live entertainment, and one more for feature films and games.
4. Coca Cola Femsa SAB de CV.
A company dedicated to the production, distribution, and marketing of cola and flavored soft drinks, and waters and still beverages (including juices, coffee, teas, milk, value-added dairy, and isotonic drinks).
It is also dedicated to the acquisition, holding and transfer of all types of bonds, stocks, and marketable securities.).
5. Grupo Aeroportuario Del Pacifico.
Holding with concessions to operate, maintain and develop approximately 10 international airports in the Pacific and Central regions of Mexico, and an international airport in Jamaica.
The holding’s segments include the Guadalajara airports,Tijuana, Puerto Vallarta, San José del Cabo, Montego Bay, Hermosillo, Bajío; other airports, and other companies.
Pros and cons of Mexican stocks
Every share purchase process has pros and cons.
Therefore, it is important to be informed to make the best financial decision.
In the case of considering the possibility of buying Mexican shares, you should consider the following information:
|Possibility of faster growth as it is an emerging economy.||Economic risk due to uncertainty in emerging economies.|
|Diversification, which is not obtained by investing in US exchanges||The influence of its own and US governments on its economy.|
|United States-Mexico-Canada Agreement (USMCA).||Currency risk, a constant in emerging economies.|
|Export-oriented economy and meeting global demand.||Liquidity risk, another characteristic of emerging economies.|
How to buy Mexican stocks?
Now that you have more information about how Mexican stocks trade both on the BMV and on the US stock exchanges, you will surely want to buy some to take advantage of the advantages they offer investors.
Under the “100% Shares, 0% Commissions” policy – which applies when investing in unleveraged stock buying positions – eToro users have the opportunity to invest in more than 2,000 shares, soon many more, of 17 exchanges around the world, including the BMV.
To purchase Mexican shares on eToro, follow these steps:
- Experiment. Before investing your capital, choose the Virtual Portfolio option; That way, you can live the experience without taking any risks.
- Locate the action. In the search engine of the platform, type the name of the company and click on it.
- Inform yourself. On your screen, you will see the name under which the issuer is listed, the purchase price of the share and the News, Statistics, and Charts sections will be free.
- Decide. Once you have gathered the necessary information, direct the course to the upper right corner and click the Invest button.
- Choose 0 Commissions. To enjoy the benefits of 0 Commissions per transaction, choose option X1 (ie no leverage).
- Set aside an amount. At the top, you will find a window in which you can choose the amount you want to invest.
- Run. Click Execute Operation.
How to purchase shares in the BMV (Mexican Stock Exchange)?
Any individual or legal entity of Mexican or foreign nationality can invest in the securities (capital or debt) listed on the Stock Exchange.
The process begins when an investor is interested in buying or selling security listed on the Stock Exchange:
- The investor signs an intermediation contract with one of the Mexican brokerage houses –because the BMV is not empowered to enter into purchase and sale contracts– and the latter assigns an account executive.
- The account executive uses the electronic systems for the dissemination of stock market information of the BMV to deliver a market price to the investor.
- Once the decision is made, the executive enters the investor’s purchase order into his brokerage house system, which is subsequently captured in the Capital Market Electronic Trading, Transaction, Registration and Allocation System (MONET).
- Once the transaction on the BMV is closed, the buyer and seller are notified and the Stock Exchange informs all market participants about the characteristics of the transaction.
- Three business days after the transaction, the Central Securities Depository of Mexico (S. D Indeval), upon instruction from the selling brokerage house, transfers the share values from the account of the selling brokerage house to the account of the house. shopping bag. And the amount corresponding to the transaction is transferred from the buying brokerage house to the selling brokerage house.
Mexico continues to be a promising economy and is among the world’s leading financial nations.
Being the ninth-largest economy in the world, and thanks to its proximity to the United States and Canada, managed to become a hot spot for investors.
Which sectors of Mexican stocks are a good investment option?
By now, you will surely want to know in which sectors Mexican stocks are a good investment option.
The BMV recognizes 10 sectors –Energy, Materials, Industrial, Services, and non-basic consumer goods, Products of frequent consumption, Health, Financial Services, ICT, Telecommunications Services, and Public services–, divided into subsectors, branches, and sub ramps.
Within this classification, those sectors in which companies with a presence on world stock exchanges operate stand out.
This, definitely, is a factor that transmits confidence to the investor.
If you are already an eToro user, we suggest paying special attention to those stocks with a presence in the sectors of:
Materials, which include chemical products, construction materials, packaging and containers; glass and plastic products; metals and mining; wood and paper products, and manufacturing and marketing of materials.
- Mexican companies: Kimberly-Clark de México / Alpeka.
- Foreign company: Coeur Mining, Inc. / VanEck
Telecommunications services, which include various telecommunications services, wireless telecommunications services, and media.
- Mexican companies: América Móvil / Maxcom.
- Foreign company: Vanguard Telecommunication Services / JCDECAUX SA
Frequently consumed products, of which the sale of frequently consumed products, beverages, food, tobacco, various, household products and personal products are part.
- Mexican companies: Grupo Bimbo / Grupo Lala.
- Foreign company: Diageo / P&G.
Indeed, among the shares that eToro users can buy are those of the cement company CEMEX, the telecommunications company América Móvil and the Televisa media group.
Mexico has one of the most internationally recognized stock exchanges: the Mexican Stock Exchange (BMV).
Important national and foreign corporations operate in it, which makes it a safe way to access the purchase of shares.
Currently, it is possible to invest in Mexican stocks, under a framework of total transparency, either through the BMV or the eToro platform.
Definitely, today opens a range of opportunities to design an investment strategy that includes Mexican stocks; however, it is convenient to analyze the pros, cons, and other alternatives to make the right decision.