BMV weakened by volatility, rate hikes and high inflation

The Mexican Stock Exchange (BMV) has weakened in the last five weeks due to risk aversion due to the war between Russia and Ukraine, due to concerns about rising inflation and the cycle of increases in interest rates, although its The fall has been less when compared to the US indices, explained José Oriol Bosch, general director of the stock exchange.

Since last April 4, the main stock index of the BMV, the S&P/BMV IPC, has fallen 12.92%, a loss of 960,428 million pesos, falling below 50,000 units and moving away from its last historical record of 56,703.80 points, April 1.

This Monday marked its third consecutive fall, falling 0.98% to 49,057.46 units, one of its lowest levels since May 2021, after this year it has touched nine all-time highs. The drop of the last three days is 4.62 percent.

José Oriol Bosch said that with the geopolitical conflict, an increase in the prices of energy and food raw materials, such as gas and grains, is being observed, with an impact on global inflation.

“Inflation is taking place, even much higher than expected,” he said.

The manager added that the drop in the S&P/BMV IPC coincides with the fact that in the last five weeks there have been upward revisions in the estimates of the global inflation rate in Mexico and in the world.

“Central banks are reacting and raising interest rates to combat inflation and, furthermore, they are doing so at a time when the economic growth of the main countries is being revised downwards,” explained the manager.

In addition, he said, the risk of the pandemic is added, which in the case of Mexico seems to be overcoming, but in other countries such as the case of China it has not yet ended, which is generating less growth.

However, he explained that the BMV has been resilient to the pandemic because it accumulates a drop of 7.91% in 2022, while the Wall Street indices have even double-digit falls.

The NASDAQ falls 25.71%; the S&P 500 loses 16.26% and the Dow Jones 11.26 percent.

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