Publication: Mexico : Capital Market Development
Date
2013-03
ISSN
Published
2013-03
Author(s)
International Monetary Fund
World Bank
Abstract
Securities markets in Mexico are orderly
and relatively innovative; however, corporate markets lag
behind those in comparator countries. The government bond
market accounts for the bulk of the fixed-income segment,
and is well developed and active. While financial savings
rates have been growing, little has been transformed into
long-term investments. Most of the savings remain in
traditional savings accounts. Institutional investors still
hold the bulk of their assets in government bonds. Mexico
will need to find solutions to further develop its capital
market to fund its development needs. In the infrastructure
sector alone, the country needs approximately US$230 billion
of new investments. In the corporate sector, provision of
financing by banks fare well below peers, especially for
small and medium enterprises. Meanwhile, the pension fund
industry, growing at about US$20-US$30 billion annually,
requires sound investment outlets. The large concentration
in the control of financial intermediaries raises complex
issues and may stunt market development. The investor base
in the equity market lacks diversity, with limited
development of the retail segment. Mutual funds could play a
key role in mobilizing long-term finance. Most funds are
used by banks as alternative ways of tapping clients'
savings. Mutual funds (particularly open ones) are much more
sensitive to liquidity risks than institutional investors
with long-term horizon. The independent distribution vehicle
created under the 2002 reform has not been very successful
in fostering sustainable entry. Restrictions placed on
institutional investors limiting investment to only publicly
offered securities keep them away from more specialized investments.
Link to Data Set
Citation
“International Monetary Fund; World Bank. 2013. Mexico : Capital Market Development. © World Bank, Washington, DC. http://hdl.handle.net/10986/16747 License: CC BY 3.0 IGO.”