Mexico needs to strengthen the stock market

Mexico needs to strengthen the stock market to increase its competitiveness and be able to support medium and long-term economic growth, as well as attract a greater number of investors, said María Ariza, general director of the Institutional Stock Exchange (Biva).

In a conference, he said that to increase the depth and liquidity of the stock market, it is necessary to work on the demand side, attracting more local and foreign investors, but also individual or “retail” investors. This is a joint effort between all the players, such as authorities, regulators, brokerage houses and the exchanges themselves.

“We must reinforce the message that today more than ever we must invest. The market lacks depth, but it has shown that it offers certainty, that it is seeking to become more and more reliable. We are investing in technology and infrastructure so that investors are more comfortable and so that at the same time that investment opportunity is more available so that more people can invest and overcome situations, ”said María Aiza.

Although he recognized that today there are companies that have decided to delist their shares from the Stock Market and, at the same time, there is a shortage of Initial Public Offerings (IPO), this is largely explained by the low demand in the market. But with all this, there are companies that are institutionalizing to go public.

In this sense, Javier Perochena, director of Emisoras de Biva, assured that they have established relationships with 450 companies, of which 80 are being institutionalized. “It is a process that takes two or three years, but we are convinced that the harvest will be seen in the following years,” he considered.

New stations in 2022

The manager explained that in 2021 there was greater activity in the short and long-term corporate debt market, with issues of around 70,000 million pesos, with a total of 67 placements.

He recalled that in February next year the IPO of Globcash, the pledge business company, is expected, which will be the second share placement in Biva and the second in the entire stock market in four years.

Biva executives highlighted that thematic bond issues or ESG (green, social and corporate governance) were accelerated by the coronavirus pandemic. In this year, 44% of all long-term debt issues were placed under one of these labels.

“In the next three years we believe that more than half of all the emissions that exist in the market will come with this label. This was accelerated by the pandemic, both investors and issuers saw it more in the long term, ”said Javier Perochena.

Go by gender index

Given the momentum that this thematic bond market has had, the CEOs of Biva announced that they are working on the development of a gender index, in conjunction with Bloomberg, which trusts that its launch can be announced between 2022 and 2023.

“We need to have an interesting critical mass of Mexican companies and that will generate that more and more companies seek to belong to these indices, this will achieve an appetite in the Mexican market and more inclusion of investment,” said María Ariza.

On other issues, the board considered that with the new better execution rules not only will Biva’s market share increase, but also the Mexican stock market as a whole.

“The best execution part blocked us, basically they did not allow us to increase our market share because the algorithms were practically at 98% turning to see the competition, so it is impossible to increase market share like that,” he said.

In this 2021, Biva estimates to close with a market share of 9% and towards the medium term reach between 30 to 40 percent.

A bigger market is needed

At a press conference, the general director of the Mexican Stock Exchange (BMV), José Oriol Bosch Par, assured that Mexico deserves a much larger stock market, and for next year it is expected to have better returns, more debt placements and more instruments such as new derivatives and futures.

Despite the drought of Public Offerings on the BMV and company failures, “in short, we see 2022 better than 2021, with a better level for the S & P / BMV IPC, with higher debt acquisitions as part of the financing need for productive projects and we seek that next year exceed the pre-pandemic levels “, said the manager.

Currently, the main index of the Mexican Stock Exchange has a yield of 16.10% and stands at a level of 51,163.66 points. The annual yield of the FTSE-BIVA is 16.48% and stands at 1,056.42 units. (With information from Ariel Méndez)

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