Market prospects 2023

The Mexican market presents interesting prospects despite the complex global outlook; the stock market could present a significant rebound in the year

2023 will entail different economic challenges, mainly related to the current scenario of inflation and interest rates. These variables will impact global economic growth in the short term.

On the other hand, the profitability of the different companies would face changes throughout the year assuming a baseline scenario in which these economic variables will continue to affect consumption at least in the first half of this year, so that consolidation can be seen later on in the inflation towards the objectives of the central banks and with it an eventual relaxation in monetary policy.

These factors have also greatly affected the foreign exchange market; particularly, the Mexican peso ranks as the emerging currency with the greatest appreciation against the dollar in recent years. This situation must be considered for the next reports of results that would show financial impacts on companies that mainly have income and liabilities in foreign currency.

In addition to the different factors in our economy that have influenced this great performance of the Mexican currency, the prospects for foreign investment in Mexico are added, mainly explained by the reconfiguration of supply chains and the geopolitical conflict between the United States and China, which would benefit different industries in our country derived from the strategic location and the link with industrial activity in the neighboring country to the north.

Our market shows a significant recovery compared to the levels observed in the second half of 2022. We believe that there are still interesting opportunities this year that, despite the complex global outlook, different sectors will be able to take advantage of the prevailing situation by having bargaining power market share, healthy balance sheets and attractive growth opportunities.

To mention a few examples, sectors such as financial institutions, tourism (airport groups and hotels), real estate fibers, will continue with remarkable solidity in their fundamentals in the coming quarters.

For the main stock index in our market, we estimate a return of more than 12% compared to current levels, which represents a high single-digit increase in consolidated revenues, in line with a nominal growth of Gross Domestic Product of 6% and with end-to-end inflation of 5% towards the end of 2023.

The upcoming decisions of the Federal Reserve will continue to affect Banxico’s monetary policy, being able to observe the reference rate at levels close to 12% at the end of 2023 in our country.

Regarding international markets, domestic investors should consider the significant appreciation of the exchange rate that could favor entry levels in different sectors that had shown relevant adjustments in 2022 and continue at far behind levels.

The main technological index in the United States continues -32.4% below the maximums observed in 2021.

We must mention that our base scenario in market forecasts does not include forecasts regarding the upcoming electoral periods in Mexico and the US, which will eventually affect the economic outlook and market valuations in the medium and long terms.

2023 will be a very interesting year and investors should be attentive to capitalize on the different opportunities that will arise in a changing economic environment.