Mexico is one of the most promising emerging countries with plenty of positive things going for it, including its geographical position. We analyze the 3 most important stock market indexes for investors interested in Mexico.
Mexico has one of the largest economies in the world. According to the IMF, Mexico’s economy is the 15th largest in the world based on its nominal GDP. Based on its real GDP, it is the 11th largest. With over 125 million people, it is future economic powerhouse.
Additionally, Mexico enjoys a unique geographical position, next to the United States and very close to Canada. This makes it possible for Mexico to benefit from the economic growth of its two North American neighbors and attract plenty of investments from companies who want to relocate their manufacturing activities from China to be closer to the US market.
Investing in Mexico is, therefore, extremely interesting. However, despite being represented in the global MSCI Emerging Markets index, its weight in it is roughly 1%. Almost negligible.
If we want to invest passively in Mexico, we must find an ETF that tracks one of its stock market indices. In the next few sections, we analyze the 3 most important ones:
S&P BMV IPC
The S&P BMV IPC is the most important stock market index in Mexico. Published by S&P Dow Jones Indices, the same company that calculates the famous S&P 500, this index was introduced in 1978.
The S&P BMV IPC is composed of the 35 largest companies on the Mexican Stock Exchange. In it we would find corporations such as Walmart de Mexico or Cemex.
These companies are weighted according to their market capitalization adjusted for free float. However, the index methodology specifies that no company can represent more than 25% of the index’s capitalization. It that were to happen, its weight would be capped at 25%.
The main version of the index is calculated in Mexican Pesos (MXN), but it is possible to find versions denominated in other currencies, such as US Dollars and Euros, for foreign investors.
If you want to learn more about the S&P BMV IPC, here is the link to its official website.
FTSE Mexico All Cap
The second of Mexico’s stock market indices that we will analyze is the FTSE Mexico All Cap, published by FTSE Russell, a subsidiary of the London Stock Exchange.
This index offers us a little more diversification than the S&P BMV IPC, thanks to the fact that it is composed of 55 companies. Although the same stocks dominate both indices.
The FTSE Mexico All Cap index weights its companies according to the market capitalization adjusted for free float, without applying any type of cap.
You will find more information on the official website of FTSE Russell.
Finally, we also have the option to invest in an ETF that tracks the MSCI Mexico. This index, owned and published by the US company MSCI, is composed of all Mexican stocks that are part of the MSCI Emerging Markets index.
The exact number of stocks fluctuates over time, depending on how many companies meet the criteria to be added to the index, but hovers around 25. Therefore, its composition is very similar to that of the S&P BMV IPC index, seen above.
To find more details about the MSCI Mexico, here is the link to the MSCI website.
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Funds and ETF