The investments of Mexicans in the International Quotation System (SIC) have taken a turn this year. Today, oil or energy sector stocks lead the gains, while technology firms, which once dominated preferences, lag behind.
“Due to the situation, companies in the energy sector, especially oil companies, have benefited from the increase in crude oil prices. We saw very strong increases, mainly at the beginning of the year, with the reopening of economic activity and with Russia’s war in Ukraine, crude reached multi-year highs and this boosted the prospects of these companies,” explained James Salazar, deputy director of Economic Analysis at CI Banco.
Of the 10 stocks with the highest returns on the SIC, seven belong to the energy sector. PBF Energy, a US oil refining company, leads the gains this year (130.65%).
The second share with the highest return is Occidental Petroleum, dedicated to the exploration and exploitation of crude oil (99.13%) and Valero Energy, the American company focused on the production and marketing of fuels and petrochemical products (60.44%).
Other three companies with higher increases in the SIC this year are the American oil and gas company, Halliburton (57.35%), Marathon Oil (53.98%), dedicated to the exploration and extraction of oil and natural gas, the Texan Apache Corporation (51.98 %), from the oil and gas business, as well as ExxonMobil (45.75%).
The important increase in the price of commodities has generated a rise in the shares of oil companies, which are becoming very attractive for local investors”, commented Kevin Ortiz, SIC specialist at Signum Research.
As an additional factor, the shares of oil companies are “cyclical, they respond well to inflation.” It is a sector that benefits from inflation because the prices of commodities rise and they sell at a higher price, which means they have a greater margin.
The SIC is the platform of the Mexican Stock Exchange that allows you to invest from Mexico, through a brokerage house, in company shares and in ETFs (Exchange Traded Funds) listed in other stock markets.
They lose attractiveness
In contrast, stocks in the technology sector, after posting double and even triple-digit returns between 2020 and 2021, are lagging in the SIC.
The streaming firm, Netflix falls 67.27%, Meta Platforms (formerly Facebook) falls 38.06% and Amazon has lost 26.78 percent. Other companies such as Alphabet, Microsoft, Tesla and Apple also lose 20.20%, 17.33%, 15.71% and 11.62%, respectively.
Even in its home market there is a drop in the shares of the aforementioned technology firms. In this 2022, Netflix loses 66.82%, Meta 36.96% and Amazon 25.47 percent. Meanwhile, Alphabet, Microsoft, Tesla and Apple also lost 18.35, 16.04, 13.96 and 10.07% on the NASDAQ, in that order.
In fact, the NASDAQ index, which has greater exposure to technology companies, fell 19.69% this year, while the S&P and the Dow Jones industrials lost 12.39% and 8.83%, respectively.
“Technology stocks are being left aside by national investors because they represent a greater risk as they trade at higher multiples than the market in general, that is why it is this sector that they first remove from portfolios, given an uncertain environment,” he commented. Kevin Ortiz.
In addition, he said that technology companies cannot raise their prices at the same rate as inflation, while oil companies can.
In this year within the SIC, in the top 10 with the lowest returns are Netflix (-67.27%), Shopify (-67%) and Didi (-61.13%).
Those companies dominated the market and the taste of Mexicans between January and May 2020. In these first months of the pandemic, Tesla earned 140.04%, Amazon 70% and Netflix 65 percent.
portfolio rearrangement
James Salazar explained that given the prospects for monetary policy in the United States (with rising interest rates), investors have rearranged their portfolios and prefer to go for safer investments, more linked to the economic cycle.
He emphasized that there may still be months for the positive performance of oil stocks to be maintained. The expectation is that at a certain moment the conflict between Russia and Ukraine will be resolved and the Organization of Petroleum Exporting Countries (OPEC) will resume or complement the entire supply of crude oil, as these two elements are adjusted, they will be reflected setbacks in the prices of commodities and, at the same time, in the shares of oil companies on the Stock Exchange.
The International Quotation System continues to maintain relevance within the total operations of the BMV. Currently, for every 100 pesos that are traded in the stock market, 53 pesos correspond to international shares and the remaining 47 pesos to national companies.
Regarding the daily average traded value in the SIC, it was 11,417 million pesos, 13% higher than the first quarter of 2021, shows information from the Mexican Stock Exchange.
“The SIC is operating more than the Mexican market and has covered the lack of supply from local companies. The number of listings of foreign instruments has grown for a few years”, said Jacobo Rodríguez, director of Financial Analysis at BWC.