Mexico City — The first months of 2023 have led some analysts to modify their expectations about the performance of some of the biggest companies in Mexico. If at the beginning of the year the playbook pointed to defensive strategies, some analysts have begun to relax their caution in the short term.
The change has been motivated by the resilience shown by some companies, which have been able to navigate inflationary pressures with pricing strategies. Even some, such as consumer staples companies, have done so without major sacrifices in volumes.
“At the beginning of the year we were very cautious,” said Marisol Huerta, an analyst at Bx+ focused on consumer companies. “We changed our stance from neutral to buy or positive as we saw favorable catalysts.”
Among the headwinds are expectations of GDP growth for Mexico; remittance inflows, which could reach $60 billion according to the Mexican government; and higher investment driven by the relocation of nearshoring chains.
Factors such as the exchange rate and interest rates will continue to be key and a source of constant vigilance. Mexican transnationals have been able to weather the decline in their dollar revenues, compensating with the strength of their non-dollarized markets. At the same time, a weak dollar contributes to reducing their costs for some materials traded with this currency.
On the other hand, the slowdown of the bullish cycle could open the appetite for higher risk assets and investment in companies such as real estate investment trusts (REITs) that are currently raising capital to promote new developments, mainly industrial.
In the case of cyclical companies, as they are known to those closely linked to the economic cycle, such as cement, mining and petrochemical companies, there are two views.
On the one hand, analysts such as Valentín Mendoza of Actinver foresee a normalization of comparable bases. This applies both to the issue of costs, which are expected to be less challenging than they were in 2022, as well as the adverse effect on the price of minerals.
But for others, such as Marco Antonio Montañez of Vector, expectations of a slowdown in the face of macroeconomic environments such as a probable recession in the United States, do not exempt these types of companies from challenges in the second half of 2023.
A more conservative approach would continue to target consumer staples and real estate companies, mainly industrial REITs, which do not yet fully reflect the dynamics of a high-demand market.
Methodology
Bloomberg Línea consulted analysts, industry associations and stock market experts, as well as analysts’ reactions to the first-quarter financial results of the country’s companies to draw up this list.