Overview of Recent Market Trends
In the first quarter of 2025, a new round of investment outflows from the portfolio market amounting to $541 million was reported, along with an additional $1.869 billion withdrawn by Mexican investors, according to data from Banco de México (Banxico).
Portfolio Investment Liquidation
The portfolio investment liquidation streak extended to four consecutive quarters, although this quarter witnessed the most moderate outflow among them. Simultaneously, Mexican investors maintained their exit trend for four consecutive quarters.
According to the balance of payments report for the first quarter, between April 2024 and March 2025, a total of $17.034 billion left the Mexican market. The peak liquidation of Mexican titles occurred between April and June 2024, when foreign investors divested $8.937 billion from the Mexican market.
Nature of Speculative Investments
Banco Base’s economic analysis team explained that these investments are predominantly speculative and financial in nature. Investors aim to earn returns without engaging in the operational or strategic decisions of the entities they invest in.
This speculative nature is evident when comparing the current portfolio market outflow to the same period in 2024. In January-March of that year, $8.642 billion flowed into the market. At that time, the interest rate was at its maximum level of 11.25%, and the differential with the US interest rate stood at 600 basis points, well above the restrictive historical level of 450 basis points.
Luis Pérez Lezama, Director of Economic Research at Saver, explained that domestically, the persistent decline in Mexican interest rates limited the returns offered by Mexico amid global market uncertainty fueled by the “factor Trump.”
Banco Base experts emphasized that portfolio investments are sensitive to market condition changes or investor risk perceptions. Known as “floater capital,” these investors can easily enter and exit the country.
Mexican Investor Exodus
Local entrepreneurs continued to move their capital out of Mexico during the first quarter of 2025, extending the exodus initiated in April 2024, according to Banxico data.
In the first quarter, Mexican investors transferred $1.869 billion abroad, marking the fourth consecutive quarter of divestment.
The outflow of productive Mexican capital observed in the first quarter contrasts with the local investment return of $965 million in the same period of 2024.
Key Questions and Answers
- What is the total amount of investment outflows from the Mexican market in Q1 2025? $541 million from portfolio investments and an additional $1.869 billion by Mexican investors.
- Why are these investments considered speculative? Investors aim to earn returns without engaging in the operational or strategic decisions of the entities they invest in.
- What factors contributed to the recent outflow of Mexican capital? Persistent decline in Mexican interest rates, global market uncertainty fueled by the “factor Trump,” and ease of capital movement.
- How does the current outflow compare to Q1 2024? In Q1 2024, $8.642 billion flowed into the market, while in Q1 2025, capital exited to the tune of $541 million and an additional $1.869 billion by Mexican investors.
