(Expansion) – Recent announcements have drawn attention to the intention of important companies in Mexico, such as Lala and Santander, to withdraw their shares from the Mexican Stock Exchange. In general terms, the above is not good news for the market or for the economy, since the fact that there are more companies in the stock market can have positive impacts on the country’s corporate community.
The announcement of exits from the Stock Market adds to a theme that has been present for several years, and that is the fact that the size of the stock market in Mexico is small compared to its potential. The stations listed are few and on top of that we receive announcements that some are leaving. Even in comparison with Latin American countries, the number of companies listed in Mexico is low.
In February 2021, in Mexico there were 141 issuers listed on the Stock Exchange, according to data from the Mexican Association of Stock Market Institutions (AMIB). In Chile there are 194 issuers, in Peru 197 and in Brazil 359. For reference, in the United States (EU), which could be the most developed stock market, there are 4,852 companies listed.
Regarding GDP, the capitalization value of the Stock Market represents 34%, while in Peru this value is 46% and in Colombia 43%. To the above, we could add that of the 141 companies that are listed in the Mexican market, less than half register significant operating volumes, that is, their shares move little.
As we see there are challenges, so work must be done to make the market more attractive for companies that need financing and also for savers who seek to invest their resources and I think it is important to point out the advantages of companies being listed on the Stock Market.
First, public broadcasters tend to have higher standards of corporate governance, which in turn has positive impacts not only financially and economically, but also socially. There is more and more demand from the markets for companies to adopt measures in the care of the environment, an example of this is the recent demand of some investors towards energy companies to reduce their CO2 emissions.
In addition to the environmental, there are other social elements that increasingly weigh more in the decisions of investors, remember how the sexual harassment scandals delayed the IPO of Uber. The company had to initiate investigations to resolve these issues, so that its listing on the Stock Exchange was not affected.
On the other hand, public companies must be more transparent, since they are obliged to publish reports periodically, in addition to communicating relevant events to the investing public. This increased public attention and scrutiny contributes to making them better managed companies and also has positive effects from the point of view of regulators, due to the greater amount of public information.
So far we have discussed the benefits that we observe in public companies: better corporate governance, which can translate into greater care for the environment and other social issues, as well as greater transparency; However, from the particular point of view of companies, going public or not going public is not necessarily good or bad.
The main reason for seeking to place shares is the possibility of accessing financing at a lower cost; However,
it may be that the company’s growth plans do not require it. If the company is already public, but the number of shares is low and the operation is small, it may be reasonable for a company to decide to leave the market. Additionally, if shareholders perceive that their shares are cheap, it could be a good investment to buy them back.
In summary, it is positive that Mexican companies seek to be public, so increasing the size of the market remains a pending task, both on the side of the authorities and the intermediaries.
Editor’s note: Eduardo López Ponce is a Stock Market Analyst at Grupo Financiero Ve por Más, an economist by profession, with more than six years dedicated to stock market analysis. Follow him on and / or on. The opinions published in this column belong exclusively to the author.
