Mexican Stock Exchange Contracts on Monday

Stock exchanges around the world concluded with mixed movements as investors exercised caution following the news of slower-than-expected economic growth in China. Earlier this week, multiple analysts announced that China, the world's second-largest economy, grew 6.3% year-on-year in the second quarter, significantly below the 7.1% predicted in previous forecasts.

In line with other Latin American exchanges, Mexico seems to have followed the trend of China's economic slowdown. However, the overall economic landscape in the regional stock markets has also been weighed down by a downturn in Brazil's economic activity, which currently registers a 2% decrease on a seasonally adjusted basis despite a flat growth expected by analysts in Latin America.

"A significant number of companies in Mexico are scheduled to present their second-quarter financial results, although the majority of reports are expected for the following week,” stated MetAnalisis. The worst performers include: Pinfra, with a drop of 2.29%; Arca Continental, down 2.09%; and the giant Grupo Televisa, with a decline of 1.92%.

The main index of the Mexican Stock Exchange (BMV), the S&P/BMV IPC, started the week showing a decrease of 0.27% at 53,623.27 points, while the FTSE BIVA, from the Institutional Stock Exchange (BIVA), has declined 0.57% to 1,103.51 points. Within the benchmark index, most stocks have approached negative territory, with 25 of them settling in the red and 10 of them located in the green.

Despite Monday's negative results, the Mexican Stock Exchange Index (IPC) has accumulated a year-to-date gain of 10.65% and sits 6.03% below its all-time high of 56,536.68 points.

America Movil’s (AMX) shares dropped sharply following the release of its 2Q23 results, which caused the telecommunications company to lose MX$37.93 billion (US$2.26 billion). The industrial sector, on the other hand, managed to break away from the negative trend thanks to the positive performance shown by Mexican airport groups, among others.

Out of the 524 companies that traded during the session, 236 ended with price gains, 256 experienced losses, and 32 closed without any changes. The stocks that showed the highest increase were Banco Santander (SAN), with a rise of 7.95%, followed by oil and gas exploration company Vista Oil & Gas (VISTA A) which saw a 5.49% increase and mining firm Frisco (MFRISCO A-1) with a gain of 1.85%.

"Many countries rely on China's strong economy to drive growth in their own territories, particularly in Asian countries. Thus, the sluggish growth in China may have some negative spillover effects for the United States. However, there is nothing that points towards a potential recession," says Janet Yellen, Secretary of Treasury, US. 

As companies prepare to announce their second-quarter financial results, the market remains attentive to ongoing developments. With uncertainties surrounding China's economic trajectory, investors will closely monitor its potential spillover effects on other economies.