Economic Growth Projections for Mexico in 2025
Mexico’s economic growth projections for 2025 are estimated between 0.4% and 2.0%, mirroring a global slowdown and reduced external demand. This environment could negatively affect the profit expectations of companies listed on the Mexican Stock Exchange, many of which may adjust their targets alongside quarterly financial results presentations.
Relocation of Foreign Companies: A Silver Lining
The phenomenon of foreign companies relocating their supply chains to Mexico presents an opportunity amidst the challenges. This migration could benefit sectors such as infrastructure, logistics, and advanced manufacturing, creating niches of opportunity within the stock market.
Geopolitical Risks: The Looming Threat of Tariffs from the U.S.
The most significant geopolitical risk for Mexico in 2025 is the potential imposition of tariffs by the United States. A trade war would directly affect Mexican exports, foreign investment, and in the currency market, the Mexican peso, which despite its resilience, could return to levels near 19.50 units per dollar.
Interest Rates Trend: A Determining Factor for Equities
Interest rate trends are another crucial factor for equities. In Mexico, the monetary authority is conducting policy within a cycle of cuts, placing the reference rate at 7.50%, with expectations that it will end the year below 7.00%.
This policy has mixed effects on the stock market. On one hand, lower rates reduce financing costs, boost corporate investment, and make variable income more attractive compared to traditional instruments like Cetes or Bonds. On the other hand, cuts can be interpreted as a signal of economic weakness, potentially moderating investor enthusiasm.
Performance of Key Players in the Mexican Stock Market
The Index of Prices and Quotations (IPC) of the Mexican Stock Exchange has accumulated a gain of 24.0% so far in the year, an attractive return considering the uncertain environment in which the market has developed. Several local actions outperform this performance, such as Megacable (MEGACPO) with a rise of 56.74%, Grupo México (GMEXICOB) with an increase of 52.15%, and Grupo Financiero Banorte (GFNORTEO) with an increase of 29.16%.
Another standout is the mining company Peñoles (PENOLES), reporting a return of 198%, linked to the international demand for gold, a key asset in portfolio composition during volatile scenarios. In contrast, the shares of Gruma (GRUMAB), Liverpool (LIVEPOLC), and Genomma Lab (LAB B) report losses so far in 2025.
Global Liquidity and Emerging Market Equities: A Promising Outlook
According to UBS, emerging market equities (MSCI Emerging Markets) appear attractive and may reflect an improvement in the macroeconomic context, along with a weaker U.S. dollar trend. Improved global liquidity should drive new flows towards emerging market assets.
UBS estimates that earnings should accelerate, projecting that the MSCI EM index will rise by 10.0% in 2025 and 14.0% in 2026, driven by artificial intelligence, technological self-sufficiency, and China’s anti-decoupling policies.
Strategic Recommendations for the Mexican Stock Market
From my perspective, regarding the Mexican stock market, the downward trend in interest rates provides technical support. However, low growth and tariff risks limit optimism. A selective strategy is recommended, prioritizing companies with a strong domestic market presence, low export sensitivity, and those benefiting from nearshoring.
Geopolitical Tensions: A Potential Market Volatility Booster
Recent tensions between the U.S. and China could increase market volatility. However, a large-scale trade war is unlikely as both parties aim to avoid significant disruption.
Key Questions and Answers
- What are the economic growth projections for Mexico in 2025? The projections range from 0.4% to 2.0%, reflecting a global slowdown and reduced external demand.
- How could the relocation of foreign companies impact Mexico’s economy? This phenomenon could benefit sectors like infrastructure, logistics, and advanced manufacturing, creating opportunities within the stock market.
- What are the geopolitical risks facing Mexico in 2025? The most significant risk is the potential imposition of tariffs by the U.S., which could negatively affect Mexican exports, foreign investment, and the Mexican peso.
- How do interest rate trends influence the equity market in Mexico? Lower rates reduce financing costs, boost corporate investment, and make variable income more attractive. However, they can also signal economic weakness.
- Which companies are performing well in the Mexican Stock Exchange? Megacable, Grupo México, and Grupo Financiero Banorte are among the top performers. Peñoles, linked to gold demand, also reports strong returns.
- What does UBS project for emerging market equities? UBS projects a 10.0% rise in the MSCI EM index for 2025 and 14.0% for 2026, driven by factors like artificial intelligence and China’s anti-decoupling policies.
- What strategy is recommended for the Mexican stock market? A selective strategy prioritizing domestically strong companies, low export sensitivity, and nearshoring beneficiaries is advised.
- How might geopolitical tensions between the U.S. and China affect the market? These tensions could increase volatility, though a large-scale trade war is unlikely.
