Introduction to the Mexican Stock Market’s Democratization
The Mexican stock market has embarked on a journey of “democratization,” making significant strides in just five years. This transformation has resulted in a massive surge in the number of investors, with 31 million clients currently participating.
Comparison and Growth
This impressive figure, 31 million clients, is more than double the 22 million individuals enrolled in Mexico’s Social Security Institute (IMSS). The growth is attributed to digitalization, modernization of the stock market system, and a shift in Mexican financial culture, further accelerated by the COVID-19 pandemic.
- Growth in Accounts and Assets: The number of accounts and assets managed by investment funds have grown 4.3 times over the past five years.
- Client Base Expansion: From fewer than 3 million accounts in February 2020 to over 13 million accounts by May 2021.
- Assets Under Management: The stock market’s assets have increased from around 2.4 billion pesos to over 4.5 billion pesos, representing an 80% growth.
Impact and Relevance
Investment funds now account for nearly 13% of Mexico’s Gross Domestic Product (GDP). For context, the Afores (Occupational Retirement Savings Accounts) represent 22.1% of Mexico’s GDP, having accumulated a total of 7.1 billion pesos over 28 years.
Comparison with Other Countries
Despite the progress, Mexico still holds substantial growth potential in investment funds. Canada, with a GDP 10-12% higher than Mexico’s, has 92% of its GDP in investment funds.
Within Latin America, Mexico leads, except for Brazil, which is slightly ahead. Other countries have significantly lower figures.
Expert Insights
According to Álvaro García Pimentel, president of the Association of Financial Intermediaries (AMIB), the recent surge in investment funds has made them the preferred financial instrument for distributing wealth among Mexican investors.
Regulatory Oversight and Caution
The AMIB chief emphasizes that the investment fund industry is closely supervised by the National Banking and Securities Commission (CNBV) and Banco de México. Operators must adhere to stringent regulations to ensure investor funds’ safety.
He warns about unregulated participants in Mexico who may engage in harmful practices for investors. Therefore, he advises investors to consult the CNBV’s portals and seek out authorized fund operators by the CNBV.
