Mexico has one of the largest gross domestic products in the Americas and is fortunate to have one of the richest neighbours in the world, the United States. This allows it to be one of the countries that receives the most remittances, thanks to Mexican immigrants in the USA, and also to be able to export its services and raw materials to the USA, as well as Canada, which is also a very important partner. However, it is necessary to take into account the mentality and culture of Mexicans in order to make the right investments in this country, bearing in mind that there are great inequalities between the wealthy and the poorest inhabitants.
The most important companies on the Mexican stock exchange.
Walmex.
It is a subsidiary of Walmart (the largest supermarket company in the USA). Walmex is present in Mexico and Costa Rica, as well as in other Latin American countries, but of less economic relevance. This type of business tends to respond well to inflation crises when they are not catastrophic and growth is usually stable. They are investing heavily to increase the number of supermarkets and double their size.
América Móvil.
It is one of the most important Mexican technology companies in Mexico and worldwide. Its majority shareholder is Carlos Slim. One of the advantages of this company is that, being Mexican, it has a large number of users who pay for services on a monthly basis, due to the large population of Mexico, as well as being present in most countries in the Americas and some European countries.
The main service they sell is mobile and data tariffs, i.e. a telecommunications company focused mainly on the average consumer. The performance of this company on the stock market in recent years has not been positive, so it would be advisable to carry out a rigorous study before investing in it.
Grupo México.
Conglomerate of companies founded in 1978. This group of companies is active in the mining, transport and infrastructure sectors. This could mean that further development of Mexico would require better infrastructure and consumption of raw materials, so the growth of Mexico’s economy could be correlated with the share price of companies of this type.
If we do a little more research on Grupo Mexico, we can see that they own one of the largest copper reserves in the world, when all their investments and capacity are calculated together.
Banorte.
As in most countries I have been researching, especially in Latin America, there is always a bank or financial group, which has an economic function in the country. Relevant for consumer banking and corporate finance. In the case of Mexico, Grupo Financiero Banorte is one of the most important banks in the country. In theory, if Mexico were to grow rapidly and improve its economic data, this would spill over very quickly, and almost immediately, to the major financial companies. This does not always have to be the case, as one would have to look at certain data related to accounting and management. Nevertheless, it is a company on the Mexican stock exchange to be taken into account.
We should bear in mind that many local businesses make their transactions with this bank and that an increase in consumption would also mean an increase in profits directly for this company. If the quality of employment improves in Mexico and consumption increases, this would be reflected in this aspect.
Grupo Bimbo.
You probably already know this company from having eaten ‘Bimbo Bread’ at some time in your life. A processed bread, rich in preservatives and additives, that bears little resemblance to the sourdough bread our grandparents used to eat. What I did not know, and neither did many people around me, is that Grupo Bimbo is actually a Mexican company that is present in 33 countries, including some very powerful ones such as Germany, Japan and the United States.
As it is such an expansive company, it does not seem to me to be affected by growth, especially in Mexico, so it does not seem as attractive to me as some of the companies mentioned above. In other words, for those looking to invest in the growth of Mexico specifically, it does not seem to be as attractive.
Mexico’s most powerful industries.
- Factories (Manufacturing industry): Manufacturers from all over the world are located in Mexico due to its geographical location and competitive labour force. International companies in aerospace manufacturing, automotive manufacturing, electronics or medical devices. If we look more specifically, we find companies such as General Motors (American), Volkswagen (German) or Toyota (Japanese). It can therefore be deduced that all types of countries are interested.
- Tourism industry: being quite stable and generating large amounts of employment. International corporate groups, such as the Spanish Palladium Hotel Group or Hilton Hotels & Resorts, have set their sights on Mexico. Around 9% of the people working in Mexico work in the tourism sector.
- Financial industry: being one of the countries that receives the most international money transfers and with a large number of inhabitants, the financial industry can be very interesting in this respect. Foreign banks flock to Mexico like flies. Some of them are very important, such as HSBC, BBVA, Banco Santander or Scotiabank, the latter of Canadian origin. Financial companies such as Western Union and MoneyGram are also very active in the country.
- Drug trafficking: Mexico has become very popular in the world because of its drug cartels. However, of this list, it may be one of the least economically relevant industries. However, it is still important for the understanding of Mexico’s economy. This sector can strongly influence the security sector, the real estate sector or luxury goods. States such as Michoacán, Sinaloa or Zacatecas can be strongly influenced by this type of shadow economy.
- Real estate sector: the construction of housing for residential and tourist use are economic activities that continue to grow. Tourist areas such as the Riviera Maya, Cancun, Puerto Vallarta and Mexico City are of particular interest to investors.
With the above data, it can be concluded that Mexico’s economy is quite diverse and does not depend solely on one sector. Manufacturing is the most important sector. This can be strongly influenced by the price of energy. So the energy sector and the price of raw materials can change the Mexican economy a lot.
International factors to be taken into account.
In recent years, relations between the United States and China have been worsening on a commercial level. So Mexico may start to be a good substitute, since as we have seen above, it is also a country that is prepared for the manufacturing sector.
It should be noted that the world is dividing, with the formation of the BRICS, a group of countries that seek to be more independent from the dominance of the United States and seek alternatives to the use of the US currency. China is part of this grouping of countries, so the US shifting its manufacturing to Mexico is part of its geopolitical strategy against the BRICS.
Even Chinese companies that want to expand could use Mexico as a way to avoid tariffs if they set up their factories in Mexico. Such is the case of BYD, which wants to fill the world with its cheap electric cars, in direct competition with Tesla. In addition, they could see Mexico as another customer to sell their electric cars to. This would also be positive for employment generation, as BYD estimates that it could generate 10,000 jobs in Mexico. As can be seen, this geopolitical war will generate thousands of jobs in Mexico, which will have a positive impact on its economy.
Mexican culture and its personality.
In order to understand a country and to be able to invest in it, it is advisable to know the society and personality of its inhabitants.
Mexico has more than 127 million inhabitants, making it the third most populated country in the Americas and the first with the largest number of Spanish-speaking inhabitants. This is very positive for subscription-based companies, basic food companies or financial companies.
Mexico City alone has almost as many inhabitants as Switzerland (8 million). And approaching the 9 million inhabitants of Austria.
Mexico’s inequality.
There is a high level of inequality in this country. This means that there is a wealthy class that invests in real estate, luxury goods, leisure and high-end transport. Education is also an expense that they perceive positively, either for themselves or for their families. That is why international schools are already looking at Mexico as a potential client.
Mexico’s richest states.
Wealth is not always a good thing. Some of the following wealthiest areas of Mexico suffer from gentrification, by foreigners living in Mexico, even if they are paid in other currencies and work for foreign companies or own businesses abroad.
- Mexico City: Some of the wealthiest areas of Mexico City are Lomas de Chapultepec, with large garden areas; Polanco, where there are mansions with high security and Jardines del Pedregal, which has old streets.
- Nuevo León: I feel one of the states with the highest purchasing power, the most exclusive areas are located in Monterrey, San Pedro Garza GarcÃa (being one of the areas in Mexico with the highest security) and Santa Catarina, which is an area with great industrial activity.
- Campeche: some of the most demanded areas are Zona Centro, Barrio de Santa Ana and Bosques de Campeche.
- Querétaro: with exclusive areas such as Juriquilla and the Historic Centre of Querétaro.
- Jalisco: in Zapopan and Puerto Vallarta, there are the most exclusive neighbourhoods in Jalisco. The Puerto Vallarta area is one of the most touristic in the country and its economy is heavily influenced by tourism.
Religions and spirituality.
Compared to other countries, Mexico remains a country that respects its traditions, with 77% of the population being Catholic. It is also the country with the greatest devotion to Santa Muerte, to whom petitions, altars and offerings are made.
Being a very traditional country, events such as weddings and baptisms are frequent. Also the whole economy that arises from these events and celebrations.
How to invest in Mexico from another country?
Most countries allow you to invest in Mexico, you just need to open an account with a broker that specialises in international investments. Some of the most popular platforms that offer these services are:
- Interactive Brokers.
- Degiro (recommended if you are in Europe): this is one of the most internationally diverse platforms. You can invest in the stock exchanges of more than 30 countries from their platform.
Which investors and countries are investing in Mexico?
Companies such as Softbank Group, of Japanese origin, have invested in Mexico in companies related to technology applications oriented towards finance and transport. There are also investors based in New York, such as Tiger Global Management. They have made million-dollar investments in Mexican startups related to online finance.
With the above data, it can be concluded that international investors are interested in investing in Mexico’s Fintech sector (online finance), such as in the case of applications for making payments or managing savings.
My personal opinion.
My conclusion, which is not financial advice. Is that we are in one of the greatest opportunities in history. If the disputes between the USA and China continue to increase, one of the countries that will benefit the most will be Mexico. These confrontations may increase with the advance of the BRICS, a large union of countries that do not want to depend on the US economy.
Change Language: Read this article in Spanish.