BMV, on a roll; is at its best level since June

The Mexican Stock Exchange (BMV) has been on a five-day streak closing with gains and this Wednesday it hit its best level since the beginning of June, driven by a season of better-than-expected quarterly financial reports.

The S&P/BMV IPC, the main index, has risen 6.73% since Thursday of last week, reaching 49,327.11 units at the close of October 26, approaching the 50,000-point barrier for the first time in almost five months.

Valentín Mendoza, associate director of Stock Market Research at Actinver Casa de Bolsa, explained that “a good part of the rebound has to do with a season of corporate reports that have so far been better than expected.”

“What we anticipated and that is materializing so far is the fact that we were going to see less pressure on profitability; that is, we are seeing margins contracting, but to a lesser extent than in the previous quarter, ”he assured.

Jorge Gordillo, Director of Analysis at CIBanco, explained that in addition to the good reports, last week the market sentiment became more optimistic due to the bet that the United States Federal Reserve (Fed) could reduce the intensity of the increase in Interest rates.

“This more optimistic perception came at a time when many companies’ share prices were at year lows. Thus, the rise has not only been in the Mexican stock market, there has also been an important rally in several stock markets around the world”, commented Gordillo.

To this, Alain Jaimes, a stock market analyst at Signum Research, added that the companies on the Mexican Stock Exchange are undervalued, which also explains the gains in recent days in the Mexican stock market.

In the last five days, the S&P/BMV IPC issuers that have advanced the most are Gruma (13.08%), Vesta (12.48%), Grupo México (12.29%), Kimberly Clark de México (10.96%) and Industrias Peñoles (10.15%). ).

Carlos González, Director of Analysis at Monex Casa de Bolsa, said that despite the positive streak of recent days, the volatility in the Mexican stock market will most likely continue.

“Share prices were so punished and a good report is coming, that helps a recovery, but I think it would not necessarily imply a fixed trend, they are simply opportunity purchases,” González said.

Alain Jaimes stressed that “as long as companies are able to have a price transfer strategy to the final consumer, as well as cost control and innovation strategies, we could continue to see profits, however, it is also important to bear in mind the imminent slowdown process economic”.

Jorge Gordillo said that the optimism that has been seen in the market in recent days could come to an end with the publication of the United States Gross Domestic Product (GDP) data for the third quarter of 2022.

The quarterly reporting season for the IPC began on Tuesday of last week. It will end on Friday, October 28.

positive balance

18 of the 35 companies in the most important stock market index in Mexico have already reported their results for the third quarter of 2022, of which five achieved better-than-expected results, according to a report by Monex Casa de Bolsa.

In addition, 11 issuers that have already reported had results in line with analyst estimates and two below consensus forecasts. “It is worth mentioning that as of today the S&P/BMV IPC has shown growth in sales and EBITDA of 13.7 and 6.2%, respectively,” Monex analysts said in a report.

So far, the company that has outperformed analysts’ expectations the most is low-cost airline Volaris. It reported a net profit of 806 million pesos (150% higher than the consensus estimate) and an EBITDA of 3,524 million pesos (38.9% more than the estimate).

Industrial warehouse developer Vesta is the second best performer, compared to what the consensus expected, with a net profit and EBITDA of 41.4 and 21.4%, respectively, higher than what analysts expected.

sebastian.diaz@eleconomista.mx