Mexican Economy and Stock Market Update

This was recently posted in the newsletter for Actinver-Lloyd. It shows that with all that has been going on, the Mexican economy and market has been doing well and has, (can I really use the phrase?), “strong fundamentals”! But make your own decision:

  • In the last decade, Mexico’s sovereign debt has experienced four upgrades (the last one in October 2007), and is well in the ‘investment grade’ category with a stable outlook
  • Mexico does not rely on foreign capital: reserves exceed foreign-denominated debt and local markets provide the country’s capital needs
  • The Mexican financial system is strong, enhanced by tighter supervision, and, as a result, there is no exposure to the subprime market or other troubled assets
  • Discipline and sound policies underpin financial stability: a stable currency, sound public finances, and inflation converging to that of developed markets
  • Cetes, the Mexican equivalent of T-Bills, have been a great low-risk investment. The cumulative return has been more than 17% during the last 3 years: a great return for such a low-risk asset
  • The Mexican Peso has been stable even in the current turmoil; there is no exchange-rate controls in Mexico since 1995 and foreign reserves continue to grow
  • Despite the market correction, the Mexican stock market yielded 70% in US dollars in the last three years; 82% including dividends
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