The number of investment accounts in Mexico has grown exponentially since the pandemic began, but this year high inflation, high interest rates and economic performance have slowed the creation of new accounts.
In the first semester, the number of investment accounts reached 4.1 million, a new record, which represents a six-monthly growth of 33.8% and a slowdown compared to the 70.8% rise registered in the same period of 2021, according to data from the Mexican Association of Stock Market Institutions (AMIB) and the National Banking and Securities Commission (CNBV).
Retail investors, or retail, are those individuals who buy and sell securities on their own account and not for other companies, one of their characteristics is the less experience they have and that they operate with low amounts compared to professional or institutional investors.
In the portfolio of the 35 brokerage houses, the accounts that invest less than 50,000 pesos represent almost 98.8% of the total, while eight years ago they represented 81.9%. Most of the accounts are concentrated in Grupo Bursátil Mexicano (GBM), which holds 91.8% of the total; followed by Actinver with 2.5% and Kuspit with 1.6%.
Guillermo Flores, regional director of promotion at Casa de Bolsa Finamex, mentioned that this type of investor is highly technological, very informed but poorly trained, and with very ambitious expectations regarding the time in which their investments will mature, so in cycles High inflation and rising interest rates increase their appetite for fixed income (debt, bonds).
“The bullish cycle can discourage investment in the Stock Market, since there is an inverse correlation between the rise in rates and the performance of the Stock Exchanges, likewise the appetite increases for investments in fixed income at increasingly attractive rates,” added Flores. .
In recent years, as retail investors have had more free time since COVID-related restrictive measures imposed by governments, they have been able to explore opportunities other than traditional savings accounts.
“The explosion of retail investors in 2021 transformed this ever-growing segment of the market. However, misperceptions of retail investors as short-term day traders who don’t understand the markets persist. This is clearly not the case, as most hold assets for years, while also responding to market conditions when necessary by adjusting their portfolios,” Ben Laidler, global market strategist at eToro, commented in a report.
Globally, nearly 18% of retail investors are cutting their investments to pay for rising household expenses, 16% are doing so to accumulate emergency savings, and 12% are holding onto cash, ready to invest when markets start to recover. according to the latest Retail Investor Pulse (RIB) from the social investment network eToro.
“Retail investors are facing a cocktail of tough market conditions, rising bills and higher mortgage rates, so it’s no wonder many have shifted priorities,” Laidler added.
The trend in the market towards low operating costs derived from the increase in the offer of digital platforms, greater and better quality of information, more availability and, finally, the development of open architecture in investment funds are important elements for that more people can be encouraged to enter the financial world.