COMMENTARY — Mexico’s Bolsa growing stronger

The Mexican Stock Exchange (Bolsa Mexicana de Valores), one of the fastest-growing stock markets in the world, celebrates its 100th anniversary this year.

The Bolsa is already the largest of the world’s so-called emerging markets, with total capitalization at the close of 1993 equivalent to US$200.6 billion. That capitalization figure, which increased by 43.9% in 1993 alone, also places the Bolsa among the world’s 12 largest stock markets. In terms of average annual yield, it has been the world’s most dynamic stock market during the past five years. In that period, the Bolsa’s stock price index rose by 621.3%, with a 47.9% index rise in 1993. The index continued moving to record high ground in early 1994 trading sessions. At the close of 1993, foreign investment in diverse securities and money market instruments in the Bolsa totaled US$42.5 billion (21.1% of its total capitalization), an increase of US$20.7 billion (95.3%) over the previous year. (This figure does not include foreign investment in American Depository Receipts issued during 1993 by Mexican corporations.)

Of particular significance is the continuing emergence of new market instruments in Mexico. During the past five years, the Bolsa has entered into the derivatives sector via the implementation of warrants. It has also introduced a second-tier stock market to provide additional financing sources for medium-sized companies and has markedly improved its communications systems.

Warrants are one of the fastest-growing segments of the market, with 48 warrants issued in 1993. There were also 11 new public stock offerings via the Bolsa; among them, 141.5 million shares were offered to the investing public.

The Mexican market is implementing a new international listing and trading section for foreign companies and is also linking its communications network with the most important international institutional investors. Concurrently, most of Mexico’s 26 registered brokerage houses have opened branch offices abroad.

The creation of the Bolsa’s International Quotations System will enable it to become an international securities centre. This is of particular relevance, considering the plans of North American industries, companies and institutions to seek new strategic alliances with emerging economies in 1994. — From the Mexican Investment Board’s quarterly “Mexican Investment Update.”