José-Oriol Bosch
BMV Group
View from the Top

Educate To Encourage Greater Bmv Participation Among Miners

Mon, 10/22/2018 - 12:40

Q: How are you attracting mining companies to the BMV?
A: The sector has a great deal of potential in Mexico simply because of the country’s geological wealth. We have a few mining companies listed on the BMV, but not enough. The mining sector represents 4 percent of the country’s GDP and there are many mining companies working here, but only four companies are listed on the BMV: Peñoles, Grupo México, Autlán and Minera Frisco. These companies can take advantage of the BMV’s different products since we do not exclusively focus on the stock market. Some of these companies also have short and long-term debt, so a lot of the time private debt is listed on the BMV to attract investment.
In Mexico, there needs to be a greater diffusion of knowledge in terms of the benefits and the processes for listing on the BMV. The problem is that many companies that require financing to grow or to carry out their expansion plans are not familiar with the BMV, its products or requirements. I think this is the main challenge. Those companies that have taken advantage of the opportunities of the BMV have been extremely successful.
Q: Why does Mexico not have a system like Toronto’s designed for SMEs and junior mining companies?
A: We have the legislation and, to a certain point, the products. The issue is that the level of financial education in Canada is far more widespread. In Mexico, smaller companies can already list on the stock exchange and the barriers to entry are actually very low. For example, there are no financial requirements to seek financing in the debt market. Requirements for capital markets have been loosened and we have been creating new products like the Sociedades Anónimas Promotoras de Inversión Bursátil (SAPIB), which are designed for small to medium-sized companies.
We also have a promotion department that focuses on seeking out these companies that are not necessarily large but that want to grow and that need resources to do so. For a while now, we have provided an incentive plan for companies with less than MX$500 million of shareholder equity, whereby the listing fee is not charged and the first year’s maintenance fee is charged at a 50 percent discount.
Q: What are the implications of the new BIVA stock exchange for your strategy?
A: We are not yet sure what BIVA’s strategy will be so I cannot comment much on that. However, we hope that the strategy will involve developing the trading market as it has great potential. If, instead of focusing on growing the market, it cannibalizes itself, the market will be equally as small, or even smaller. And with two stock exchanges, this makes no sense.
Q: How has the BMV protected itself against external shocks caused by international tensions?
A: The companies listed on the BMV are so diversified in terms of sectors, sizes and business segments that the impact of geopolitical uncertainty has been much less intense in Mexico. The renegotiation of NAFTA presented an opportunity for Mexico to turn to other markets. Mexico does not only have NAFTA; it has a great number of free trade agreements with other countries, even though the majority of trade is focused on the North American region.
Q: What would be included in your wish list for the next government administration to make doing business easier?
A: I think the most important thing is to spur greater growth. Rather than growing 2.5 percent, Mexico should grow by double that, at least. There have been some encouraging changes in this administration with the structural reforms, but with increased economic growth, this launches a cycle whereby greater investment is attracted to the country. Of the companies listed on the BMV, more than 90 percent are concentrated in four states in the country: Nuevo Leon, Mexico City, State of Mexico and Jalisco. It should not be like this because the GDP of those four states is not 90 percent of the country’s GDP. This means something is failing and we need to look at how we can support those companies in the other states.