BMV earns 14.5% in dollars so far this year

The main stock market index of the Mexican Stock Exchange (BMV), the S&P/BMV IPC, accumulates a gain of 14.5% in dollar terms so far this year, a higher figure than the return of 8.9% that it leads if It is measured in pesos, thanks mainly to the appreciation of the Mexican currency against the US bill.

The S&P/BMV IPC closed this Friday at a level of 52,771.12 units, compared to a record of 48,463.86 points on December 30, 2022.

So far in 2023, the peso accumulates an appreciation of 5.42% against the dollar. The strength of the Mexican currency has been such that on March 8, the parity closed below 18 units at its lowest level in 66 months. The interbank dollar closed the day last Friday at 18.4514 pesos per greenback.

“The greatest gain in dollars is due to the rise of almost 9% in terms of pesos in the S&P/BMV IPC, added to the gain of 5.42% of the Mexican currency against the US”, explained Carlos González, Director of Analysis at Monex Casa de Bolsa.

He explained that for a foreign investor who bought Mexican shares at the end of 2022 with the dollar at 19.50 pesos, today, with the stronger Mexican currency, he gets more dollars when exchanging his pesos for US bills.

Analysts consulted explained that the gain of the BMV together with the appreciation of the peso against the dollar generates an attraction for foreign investors to bring their capital to the local market.

They said that in an environment of high volatility, with the risk of a recession in the United States and Europe and a slowdown in Asia, (the strength of the BMV and the peso) attracts capital to Mexico, if we add to that nearshoring and healthy public finances.

Why do you earn more in dollars?

For example, an investor who bought a share of the automobile insurer Quálitas, the issuer that earns the most within the S&P/BMV IPC so far in 2023, has a profit of 32.29%, since the share is already at 113.66 pesos. when it was at 85.92 pesos on December 30 of last year.

But in addition, to this is added that while on December 30 he had to pay 0.0513 dollars for each Mexican peso that he acquired, now he is given 0.0540 dollars for each peso that he changes, that is, 5.42% more.

In this way, the Quálitas share in dollars accumulates a return of 39%, more than 7 percentage points higher than the performance in pesos.

Analysts explained that the vast majority of foreigners who invest in the BMV bring their flows in dollars to the country, exchange them for pesos and then buy the shares.

Once they want to get out of the market, they liquidate their shares and convert their pesos to dollars.

This is even the way to buy shares on the BMV that is most convenient for foreign investors, although they can also purchase shares of certain Mexican issuers.

Losers rise in dollars

With the return measured in dollar terms, there are even stocks within the S&P/BMV IPC that are losing in pesos during 2023, but accumulate a positive return in dollar terms only thanks to the appreciation of the Mexican currency.

There are five actions that, although they point to red numbers in pesos, achieve increases in dollars thanks to the exchange gain.

Such is the case of Banco Regional, whose titles lose 0.55% in pesos, but gain 4.57% in dollars.

The same happens with the Liverpool department store chain or the world’s largest content producer in Spanish, Grupo Televisa, whose papers fall 0.89 and 1.58%, respectively, if measured in pesos, but in dollars they rise 4.22 and 3.49%. , in that same order in what vba this year.

Two other similar cases are those of the Monterrey industrial conglomerate Alfa and that of the telecommunications company Megacable, whose shares fell 3.28 7 and 3.5%, in that order, measured in Mexican currency, while in dollars they rose 1.70 and 1.48%. , respectively.

Analysts expect the strength of the exchange rate to fade in the second half of the year. Erick Martínez, exchange rate strategist at the English investment bank Barclays, said he estimates that the peso-dollar exchange rate will close 2023 at 19 units.

sebastian.diaz@eleconomista.mx