Background on Alpek and its Relevance
Alpek, a petrochemical company spun off from the Regiomontano Grupo Alfa, is set to be removed from Mexico’s S&P/BMV IPC index this month. The S&P/BMV IPC is the primary index of the Bolsa Mexicana de Valores (BMV), representing the performance of 35 highly traded companies in Mexico’s stock market.
Index Update Process
Every six months, the BMV updates the sample of companies used to calculate the S&P/BMV IPC. This process determines which 35 companies will be part of the select group, with some new companies joining and others leaving. The recent updates are expected to take effect on September 22.
Consensus Among Analysts
Analysts from Banorte, Monex Casa de Bolsa, and Bx+ have agreed that Alpek will be removed from the index due to its failure to meet the required criteria. Specifically, Alpek did not maintain at least 95% of the trading days over the past six months.
Impact on Alpek and Other Companies
Gustavo Hernández, an analyst at Bx+, highlighted that Orbia, a company producing PVC, polymers, and pipes, among other products, will remain in the index. Alpek only met 80 out of the required 117 trading days, which is insufficient to maintain its position.
Historical Context of Index Changes
Janneth Quiroz and César Salinas from Monex Casa de Bolsa pointed out that the current methodology aims to limit excessive turnover among issuers. This upcoming rebalance would be the second without changes under this procedure, and the fourth in recent history if considering past rebalancing events in 2019’s second semester and 2022’s first semester.
Criteria for Inclusion in the S&P/BMV IPC
To be included in the S&P/BMV IPC, a company must have been traded for at least the last three months and have operations on at least 95% of the business days over the past six months. Additionally, at least 10% of its shares must be freely trading, and the floating stock’s capitalization must reach at least 10,000 million pesos based on the average weighted price over the last three months.
Implications for Investors
Many investors, both domestic and foreign, follow their investment committees’ instructions not to invest in companies not included in the S&P/BMV IPC. Being part of this index increases a company’s exposure to investors, while removal from the index may lead to decreased investor preference.
Key Questions and Answers
- What is the S&P/BMV IPC index? The S&P/BMV IPC is the primary index of Mexico’s Bolsa Mexicana de Valores (BMV), representing the performance of 35 highly traded companies in Mexico’s stock market.
- Why is Alpek being removed from the index? Alpek failed to meet the required criteria, specifically maintaining at least 95% of trading days over the past six months.
- Which other companies will remain in the index? Orbia, a company producing PVC, polymers, and pipes, among other products, will continue to be part of the S&P/BMV IPC.
- What are the implications of being included or excluded from the S&P/BMV IPC? Companies included in the index have greater exposure to investors, while those excluded may see decreased investor preference.
