The initiative to reform the Securities Market Law that is being discussed in the plenary session of the Senate of the Republic highlights how incipient the stock market is in Mexico and its underutilization.
In a 174-page draft, held by this medium, the legislators highlight that the stock sector in the country represents 35% as a proportion of the Gross Domestic Product (GDP).
We could affirm that it is a small market if we compare it with other economies, such as Russia, whose Stock Market represents 47% of GDP, Chile 67%, Brazil 69%, Spain 85% and India 99%, indicated the legislators in the initiative. that has the approval of industry participants and authorities.
The proposal highlights that there are 109 companies due to their capitalization that could be listed and is almost the same as the 138 that can currently be found listed in the Mexican stock market.
In the initiative, the legislators highlight a study by the Bank of Mexico (Banxico) in which the central institute reported at the beginning of 2023, that since March 2018, only one company was placed on the stock market through the offer of shares, while that the listed companies have obtained 8.8 billion dollars and in the same period, financing through local debt increased by 1.6 billion dollars and financing with international debt increased by 9.3 billion dollars.
Data on the situation of the business financing market was provided. Numbers are shown in which Banxico highlighted that the suppliers of the companies provide 60% of their financing, 9.7% use financing from other companies in their corporate groups or headquarters.
1% has financing from development banks, 0.5% from banks domiciled abroad, 0.2% of the companies reported issuing debt in the national stock market.
The legislators emphasize, in the initiative, that the stock market is far from its potential as a source of financing for companies, which is why the modification of the law is justified and motivated.
The senators highlight multifactors that require different fronts and over time as the main causes and factors of the underutilized stock market.
It is perceived that listing on the stock market is expensive, from a monetary and regulatory point of view, in addition to imposing “too much transparency on companies”, as well as little interest from institutional investors to invest in Mexican companies.
they get out
Recently, 17 issuers reported their intention to exit the Mexican stock market and one of the reasons is the lack of interest of investors in their titles, which is reflected in the valuation of the shares, that is, that they are worth less than what they it actually costs the company.
In addition, the proposal says, the listing processes are very long, as well as the high operation and connection costs for stock brokers.
The stock market needs participation alternatives that, on the one hand, encourage its growth and depth and, on the other, are a source of financing accessible not only to large companies, but also to small and medium-sized ones”, highlights the initiative that was discussed this Wednesday in committees in the Chamber of Senators. It will go to the plenary session of the Upper House next Thursday.
