The S & P / BMV IPC, the main index of the Mexican Stock Exchange, closed 2021 with the highest performance of the last 12 years, ending at 53,272.44 points or an increase of 20.89% and that contrasts with the 1.21% increase reported in 2020.
“2021 was a good year for the Mexican Stock Market, driven by the economic recovery, after the worst of the pandemic had already passed. It was also supported by the growth in corporate earnings reported in the different quarters. We must add to this the fact that Mexico is one of the Stock Exchanges that presents a cheaper valuation and a solid financial position ”, commented Jacobo Rodríguez, Director of Financial Analysis at Black Wallstreet Capital (BWC).
The S & P / BMV IPC is trading at a discount with respect to its historical average. The EV / EBITDA multiple (enterprise value between operating cash flow) for 2022 is 7.6 times, which compares favorably against the average of 8.1 times, according to the consensus of analysts referenced by Bloomberg.
Gabriela Siller, Director of Economic and Financial Analysis at Banco Base, commented that “during 2021, the behavior of the index was driven by the economic recovery, which allowed companies to show results in the second quarter above expectations, leading to new all-time highs such as the one reached on September 1 at 53,400.72 points ”.
The consensus of analysts of the Mexican stock market forecast that for this new year the index is expected to moderate the returns generated in 2021, reaching 57,050 units, on average.
The best and worst performers
Jacobo Rodríguez explained that the index was driven by the good performance of companies that have an important weight in the sample, such as América Móvil, a firm in the telecommunications sector, and Walmart de México y Centroamérica, the largest supermarket chain in the country.
Of the 35 companies that make up the Mexican stock index, 27 ended up higher, leading the increases in América Móvil (49.69%), followed by Volaris (48.32%) and Alsea (46.58%), as well as Grupo Bimbo (45.63%) and Arca Continental (36.41%).
The issuers with negative performance during 2021 were Industrias Peñoles (-30.06%), Grupo Bolsa Mexicana de Valores (-17.47%), Promotora y Operadora de Infraestructura (Pinfra) (-8.90%), Kimberly-Clark de México (-8.77 %) and Megacable (-4.02%).
According to Banco Base’s analysis, the gains in 2021 were concentrated in the consumer discretionary sector (32%), which represents only 1.29% of the index. For its part, the basic consumer sector, which has the highest weighting in the index (31.96%), showed a performance of 19 percent.
However, for specialists, the Mexican stock market will continue to face risk factors in 2022, such as high inflation, hikes in reference interest rates, slowdown in economic growth, as well as public policies and an environment still with a pandemic. That leads to having certain reserves on whether double-digit returns could be achieved.
“Our target for the IPC for this year is 58,000 points, but reaching them will depend on many risk factors including advances in vaccination plans, if new variants of Covid-19 are presented, how restrictive the policy will be monetary policy this year, a deeper economic slowdown mainly explained by the contraction in investments, ”said Jacobo Rodríguez.
He considered that at least in the first half of 2022, investors will keep the evolution of inflation and its impact on interest rates on their radar, which will influence the performance of the national stock market.
For her part, Gabriela Siller emphasized the factors that have damaged investor confidence in the country, which has represented a risk and, therefore, has limited the advance of the local stock index.
Among them are “the uncertainty generated by unorthodox economic policies; the greater perception of risk over Mexico in the event that the electricity reform is approved ”.
Also “the economic weakness of the country and respect for the autonomy of organizations such as the Bank of Mexico, since reducing the degree of autonomy would weaken the regulatory framework, creating greater uncertainty for investors.”
Therefore, the financial institution’s forecast is that the growth of the S & P / BMV IPC will be limited by the unfavorable business environment.
Towards the middle of 2022, the main index could operate around 53,000 points, while in the second half it could be more limited by the less flexible monetary stance on the part of the Federal Reserve of the United States.
judith.santiago@eleconomista.mx