Monday, August 9, 2010

Mexico Investment Guide: Mexican Stocks And ADRs

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 of Mexico but also came as a major blow to the 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, its 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).

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