fbpx

How to Buy Mexican Stocks

Benzinga Money is a reader-supported publication. We may earn a commission when you click on links in this article. Learn more.

Benefitting from new free-trade agreements coupled with lower energy costs, lower transportation costs and lower labor costs compared to many other countries, Mexico is poised for manufacturing growth. As Mexico’s manufacturing sector grows, other areas of Mexico’s economy are expected to benefit as well, which can provide an opportunity for investors.

Here’s how to invest in Mexican stocks.

Main Takeaways: Buying Mexican Stocks

  • The Mexican Stock Exchange is called the Mexican Bolsa. Mexican stocks can also be listed on many U.S. exchanges as well.
  • There are many benefits to trading Mexican stocks. These include faster growth, diversifying your portfolio, and other reasons we explore below.
  • You must find a broker that allows you to trade foreign stocks. Along with companies to watch, we take a look at your best options for brokers to use when buying Mexican stocks.

What is the Mexican Stock Exchange?

Mexico City is the hub for stock trading in Mexico in both the Mexican Stock Exchange, also called Mexican Bolsa, Mexbol, Bolsa Mexicana de Valores, or BMV (the largest exchange) and Bolsa Institucional de Valores, also known as BIVA.

These two exchanges serve a similar function to well-known American exchanges, like the New York Stock Exchange or the NASDAQ.

Both exchanges provide stock trading, as well as trading on other financial instruments. Much like in the U.S., where the stock market is comprised of several exchanges, activity on both Mexican exchanges should be considered.

Trading on the Mexican exchanges isn’t much different than trading on U.S. exchanges. Similar trading options are available and the exchanges are regulated by Mexico’s National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or CNBV).

Companies can be listed with just one exchange but can be quoted on both and many non-Mexican companies trade on the exchanges as well, like Citigroup (C) and Anheuser-Busch Inbev (ABI).

There are also a number of Mexican stocks that trade on U.S. exchanges, such as Wal-Mart de Mexico or Walmex (WMMVY), which is incorporated as a Walmart subsidiary serving Mexico and Central American countries. América Móvil (AMOV, AMX), a leading provider of wireless service in Latin America, also trades on U.S. exchanges.

Mexico’s economy has independent elements but also tends to trend broadly with the U.S. economy due to the close economic relationship between the two neighbors.

Following a chart of the IPC index, which tracks Mexican equities, you might think you’re looking at a chart of the S&P 500 or NYSE Composite, complete with the market swoon in 2008, followed by steady growth in the following years. To fully leverage Mexico’s continuing growth in manufacturing and related industries, you may need to invest in individual Mexican companies or tightly focused indexes.

Much like with U.S. trading, you’ll need an online stock broker — but one authorized to trade on Mexican exchanges.

Pros and Cons of Buying Mexican Stocks

The largest draws to investing in Mexican stocks and other foreign stocks are the opportunities for faster growth than you might find with similar U.S.-based companies and the chance to diversify beyond U.S. companies. 

Investing in Mexican stocks has both its pros and cons — as well as a few things to simply be aware of before making a financial commitment.

Pros

  • Possibility of faster growth: As part of an emerging market fueled by lower costs of energy and labor, Mexican companies may offer an opportunity for outsized returns.
  • Diversification: Investing in just one sector comes with its risks. On a bigger scale, investing in just one country has risks as well. Investing in Mexican stocks provides a unique form of diversification not available with only U.S.-based investment types.
  • United States-Mexico-Canada Agreement (USMCA): The replacement for NAFTA puts Mexico on equal footing with larger economies and is expected to benefit Mexican companies and workers, possibly giving the overall economy a boost.

Cons

  • Economic risk: Mexico’s GDP growth has been generally steady, but the economic growth turned negative unexpectedly in the 1st quarter of 2019, a reminder that growth in emerging markets isn’t always guaranteed.
  • Political risk: Risk due to political factors can come in several forms. Much like in the U.S., markets can be moved by uncertainty and by the actions of governments, which in Mexico’s case can be either Mexico’s government or the U.S. government’s actions.
  • Currency risk: Investing in emerging markets can mean currency risk, wherein the trades occur in pesos and then have to be converted back to dollars, possibly reducing the value of the trade due to currency price movements.
  • Liquidity risk: Even within the U.S. stock market, the largest in the world, there are sectors of companies that aren’t always easy to exit. This risk is even more common in emerging markets where sellers may not find many buyers at a given price. Choosing stocks of larger companies tends to reduce liquidity risk.

How to Buy Mexican Stocks

There are multiple ways to start investing in Mexico. The easiest by far is to buy an exchange-traded fund (ETF), which bundles a number of stocks or tracks an index. While offering diversification and a low barrier to entry, the downside to the ETF approach is that your returns may be lower than by investing in individual companies through a broker.

Step 1: Determine the Stocks You Want to Buy

Consider using a stock screener to filter a list of Mexican companies according to your investment goals. These might include companies within a given sector, companies that have been on a growth trend, companies that are paying a dividend or other criteria you feel to be important.

You may wish to diversify with several individual investments, betting on the Mexican economy as a whole.

Step 2: Pick a Broker

To invest in Mexico, you’ll need to partner with a broker that can execute trades on Mexico’s exchanges. You’ll find that one requirement quickly reduces the field of choices. Interactive Brokers is a great choice for investing in emerging markets and can complete trades on the Mexican Stock Exchange (BMV), Mexico’s largest exchange.

Interactive Brokers has several other plusses, including the company’s Trader Workstation (TWS), a full-featured trading platform that supports trades in over 100 worldwide markets and includes industry or company news, technical analysis tools and stock research tools.

Here are a few of our favorite brokers that allow you to invest in Mexican stocks.

Interactive Brokers
Commissions
$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available
Account Min
$0
Get started securely through Interactive Brokers’s website
Commissions
$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available
Account Min
$0
1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For
  • Access to foreign markets
  • Detailed mobile app that makes trading simple
  • Wide range of available account types and tradable assets
Pros
  • Comprehensive, quick desktop platform
  • Mobile app mirrors full capabilities of desktop version
  • Access to massive range of tradable assets
  • Low margin rates
  • Easy-to-use and enhanced screening options are better than ever
Cons
  • Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
Fidelity Investments
Commissions
$4.95
Account Min
$0 for IRAs. Some accounts may require a minimum opening balance of $2,500
Compare Brokers securely through Fidelity Investments’s website
Commissions
$4.95
Account Min
$0 for IRAs. Some accounts may require a minimum opening balance of $2,500
1 Minute Review

Fidelity is a comprehensive and responsive brokerage suitable for both new and experienced traders alike. With complete access to the full U.S. stock and options markets, a set of state-of-the-art education and research tools, as well as a wide fee-free fund selection, Fidelity is equally useful for the veteran swing traders to novices opening their first accounts. Mobile traders will be especially happy with Fidelity’s app, which mirrors full capabilities of the platform. Though there isn’t much to criticize about Fidelity, the broker does have a few areas where it can afford to improve. Margin rates are significantly higher than most other brokers, especially for traders borrowing less than $25,000. It also doesn’t offer any access to the futures markets. Despite these minor flaws, Fidelity remains a strong choice for most investors.

Best For
  • Easy-to-navigate yet functional platform strikes the perfect balance between expert tools and comfort for beginners
  • Mobile trading app is fully-optimized and mirrors full functionality of the desktop platform
  • Wide range of education and research options make learning more about securities and the market easier and less time-consuming
Pros
  • Complete range of both independent and managed services available at exceptionally affordable prices
  • Offers access to both domestic markets and 25 foreign markets, as well as a wide range of options contracts and over 10,000 mutual funds
  • Mobile app that is well-integrated and works just as well as the desktop platform
  • Wide selection of education tools and resources available free of charge
Cons
  • Margin rates higher than many other competing brokerages
  • No access to futures trading
  • High fees for buying a non-Fidelity mutual fund (with over 3,300 fee-free funds available)
Charles Schwab
Commissions
$0
Account Min
$0
Compare Brokers securely through Charles Schwab’s website
Commissions
$0
Account Min
$0
1 Minute Review

Charles Schwab is a solid choice for traders of all skill levels. It offers full access to the U.S. equity and options markets as well as 30 international markets. Traders can create a diverse portfolio with $0 commissions and no account minimums. Schwab’s margin trading is expensive but Schwab makes up for it with affordable futures and options trades, along with a comprehensive mobile offering.

Best For
  • 3 trading platforms perfectly in sync makes matching your platform to your skill level a snap
  • Excellent futures trading education for new traders
  • $0 account minimum means anyone can start trading
Pros
  • Wide range of available assets to trade, including futures and 30 global markets
  • SmartStreet Edge platform is powerful enough for advanced traders, yet easy enough for new traders to utilize
  • Unique educational resources (like infographics and podcasts) make learning fun
Cons
  • Margin rates are more expensive than competitors
  • More limitations on available margin than competitors
  • Expensive mutual funds

Step 3: Practice Trading in the Mexican Stock Market

Try before you buy.

The best online trading platforms offer a sandbox area where you can experiment without putting real money at risk. You can build a test portfolio — or several — and test one strategy against another or test your picks against a larger index, like the IPC, an index that tracks the Mexican stock market as a whole.

New to investing? This is an important step because it offers the opportunity to learn the ropes without the skinned knees that often come with beginning strategies.

Step 4: Begin Trading

Once you’re ready for real trading, you’ll need to fund your account. Typically, you can do this with an ACH transfer from your bank account. Expect a required minimum investment amount with many brokers and consider using an automatic deposit to keep building your investment.

Much like investing in U.S. equities, dollar-cost averaging can help you build a position over time without putting an emphasis on perfectly-timed stock purchases. If you’re a buy-and-hold investor, an account with automatic weekly or monthly deposits is ideal and helps you to add to your position over time.

Be mindful of trading costs when you begin trading. Buying or selling more frequently can result in more commissions paid to the broker and can eat away at your return. If possible, consider using larger and less frequent trades and also prioritize consistent investment amounts and intervals.

Mexican Companies to Watch and Future Market Outlook

Walmex, or Walmart de México, is the largest Walmart subsidiary outside of the U.S. and is the largest private employer in Mexico. Share prices have nearly doubled since 2015. 

Walmex overview
Source: investing.com

Shares in Cemex, the 2nd largest cement company in North America, are testing the lows last seen in early 2016. Is this the time to buy? It all depends on the type of investor you are, including your risk tolerance and willingness to research trading opportunities.

CMXCPO Overview
Source: investing.com

Mexico’s markets and stock values should continue to stabilize, ultimately rewarding investors who do the necessary research and those who have a steady hand.

While you choose your companies to target, you can still benefit from Mexico’s improving economic prospects through a number of ETFs, gradually moving to a portfolio customized to your risk profile and long-term growth goals.

Getting Started Buying Mexican Stocks

It’s impossible to time the market with 100% accuracy. Start and increase gradually when you start investing. Take your time in learning how to invest in stocks, ideally by using a test account. Make notes on what works and what doesn’t work quite as well — but also keep track of how your picks would have done if given a bit more time. You can take the lessons you’ve learned to your live trades and improve your overall skills as a trader.

Looking to expand your portfolio to include foreign companies? Learn more about buying foreign stocks, including how to invest in the Japanese stock market and everything to know about investing in the London stock exchange.

Benzinga's #1 Breakout Stock Every Month

Looking for stocks that are about to breakout for gains of 10%, 15%, even 20% potentially or more? The only problem is finding these stocks takes hours per day. Fortunately, Benzinga's Breakout Opportunity Newsletter that could potentially break out each and every month. You can today with this special offer:

Click here to get our #1 breakout stock every month.

Hire a Pro: Compare Financial Advisors In Your Area

Compare Online Brokers
Broker Commission Account Min Get Started

$0 $0 Learn More

$0 $6.95 for OTC Stocks $0 Learn More

$0 $0 Learn More

FREE $0 Learn More

$0 $0 Learn More