Stock Market Index Measures the Energy Transition

The Mexican Stock Exchange (BMV) celebrated the launch of the first stock market index that measures the energy transition in Mexico. The index is comprised of fifteen companies from the technology, energy and service industries.

The Renewable-E Index is an initiative by Phi Investment Capital in collaboration with México CO2, HR Ratings, Actinver and Nexus Energía.

María Valencia, President, the Renewable-E Index Validation Committee, explained that this instrument began to operate at 500 points and is currently at 545."It has had yields greater than 14.85 percent," she said. According to Valencia, one of the criteria for selecting the companies was that their energy generation or consumption must come from at least 15 percent renewable or clean sources.

Valencia pointed out that companies are under pressure to decarbonize their operations, either by their initiative or due to market demands, to avoid the risk of losing competitiveness if they do not meet "green standards." She emphasized that the Renewable-E Index brings visibility to these companies and enables Mexican companies to join these efforts.

Alba Aguilar, Director General, the Mexican Council of Sustainable Finance, noted that Mexico is building the infrastructure for a sustainable market that could be operational by the end of 2023.

Investment Certainty Hindered by Energy Policy

Although analysts, for example at S&P, highly rate the potential benefits of nearshoring for the Mexican economy, Mexico’s energy policy is a significant obstacle. Policy is still a major concern for attracting FDI. Furthermore, the energy dispute within the USMCA has escalated, with US companies calling on President Joe Biden to pressure Mexico for fair competition in the Mexican electricity market.

In addition, Mexico's recent acquisition of Iberdrola's assets has raised concerns about companies investing in the country. With the acquisition, state utility CFE now controls around 56% of Mexico's electricity production. Even though the purchase was generally considered to be beneficial to both CFE and Iberdrola, industry insiders showed concern about what the move may mean for the position of private power producers in the Mexican market.