Sign in Subscribe
Stocks

Mexico's Stock Market Breaks Through 10,000 Barrier

Strategic Insights

— 1 min read

Mexico City's IPC stock index has continued its upward trend, closing above the 10,000-mark for the first time yesterday. Analysts attribute the record-breaking high to signs of economic recovery in Mexico, stimulated by the uptick in the US economy and investment shifts from other Latin American countries. The IPC has rallied 72% over the last 12 months, recovering from a dip ahead of the invasion of Iraq, and is now up 14% for the year. The stock market's strong performance is a contrast to a sharp rise in bond yields last week, as investors reacted to higher inflation figures in January.

Key Takeaways:

  • The Mexico City IPC stock index broke through and closed above the 10,000-mark for the first time, setting its 18th record high since the beginning of January.
  • Analysts attribute the strong rally to signs of economic recovery in Mexico, driven by the upturn in the US economy.
  • The IPC has rallied 72% over the last 12 months, recovering from a dip ahead of the invasion of Iraq, and is now up 14% for the year.
  • Geoff Dennis, chief Latin American equity strategist at Salomon Smith Barney, notes that Mexico was seen as a more defensive market than Brazil, with fewer risks of a severe decline.
  • The stock market's strong performance comes despite a sharp rise in bond yields last week, as investors reacted to higher inflation figures in January.
  • The Bank of Mexico is maintaining its strict inflation target of between 2 and 4% for the end of the year.
  • Private economists polled by the bank now expect inflation of 3.95% for the year, leading to speculation that the Bank of Mexico might tighten monetary policy as soon as its meeting at the end of this week.

Statistics:

  • The Mexico City IPC stock index closed above the 10,000-mark for the first time, settling at 10,004.7.
  • The IPC has rallied 72% over the last 12 months.
  • The IPC is up 14% for the year.
  • Industrial production in Mexico rose by 2.4% in December, following eight months of falls.
  • The Bank of Mexico's inflation target is between 2 and 4% for the end of the year.
  • Private economists polled by the bank now expect inflation of 3.95% for the year.

Sources:

  • "Mexico's Stock Market Sets New Record High" by John Autiers, Mexico City.
  • Salomon Smith Barney, New York.

Read more