Maiden Mexico

1. The Chart Tells the Story

Congratulations, Mexico. You’ve officially put in a higher high. It’s been a long time coming, but the IPC index has finally broken through resistance, and that means one thing: we could finally be looking at a legitimate turnaround in the Mexican equity market.

Markets don’t move in straight lines. They thrash around, faking out the impatient and rewarding those who understand that accumulation takes time. And make no mistake, accumulation has been happening. Volume is creeping up, the technicals are confirming strength, and with FLMX leading the charge, this isn’t just a dead-cat bounce. This is the kind of setup traders wait months (or years) for.

The most important thing to watch now is whether this breakout holds. The last thing anyone wants is a classic bull trap, where price surges just long enough to get everyone on board before reversing hard. But so far, that’s not what we’re seeing. Buyers are stepping in, and the tape looks strong. Institutional investors are starting to sniff around, and if the momentum keeps up, we could be looking at an extended rally and a great place to park capital for ex-US exposure…

2. Global Trade Wars and the Mexico Advantage

Now, let’s talk about what’s driving this move. The global trade war is back on, and tariffs are flying around like confetti at a parade. The U.S. and China are at it again, Europe is caught in the crossfire, and Mexico is isn’t is isn’t is isn’t is isn’t looking like such a great alternative for manufacturers who need to get their goods into the U.S. with without with without with without with a 25% markup slapped on top.

At present, the tariffs are on, but there are conversations happening (possible) to change that, so nearshoring might be a buzzword again. Companies are moving production south of the border at a rate that’s starting to show up in the numbers. Industrial real estate? Booming. Employment? Rising, unless you’re talking about the youth, which to be frank, have trouble rising out of their own beds. Foreign direct investment? Strong. Mexico is positioning itself as a viable alternative to offshoring, and the equity market might be finally catching up to the story.

There’s also the consumer side of the equation. Mexico has a growing middle class, and despite inflationary pressures, domestic consumption remains solid. The banking sector is well-capitalized, and credit growth is picking up. When you combine this with the manufacturing renaissance, you’ve got a recipe for sustained economic expansion.

3. The Play: FLMX and Mexican Equities
   If you’ve been sleeping on Mexico, you’re officially late to the party. But don’t worry, the door is still open. The breakout we just saw is the first real confirmation that the tide has turned, and as long as price holds its prior highs, the upside is very much in play.

FLMX – the iShares Mexico ETF – is my preferred way to play this. Why? Because it gives exposure to the biggest Mexican stocks without forcing you to pick individual names. Liquidity is solid in the same way that slime is solid (it’s solid enough), and it tracks its benchmark well. If the rally keeps going, it’s likely to outperform significantly given the relative strength it’s been showing.

If you prefer to get more specific, there are individual stocks worth looking at. The banking sector is one to watch, with names like Banorte and Santander Mexico poised to benefit from rising credit demand. Consumer plays like Walmex (Walmart de Mexico) could also see tailwinds as the economy strengthens. And of course, industrial giants like Grupo México and Cemex are direct beneficiaries of the nearshoring boom.

4. Risks? Of Course.

This isn’t a guaranteed rocket ride. The Mexican peso has been strong, which is good for inflation but not necessarily for exporters. Political risk is always a factor, and the largest one in my view. The game of will-we won’t-we with the tariffs is creating confusion and uncertainty for everyone doing business overseas. And if the global economy slows down, Mexico won’t be immune.

There’s also the risk of government intervention. Mexico’s political landscape has been unpredictable at times, and while things are relatively stable, there’s always the chance of policy shifts that could impact business sentiment. Keep an eye on fiscal policy and any regulatory changes that could alter the investment climate.

That said, the technicals are saying “go,” and the macro backdrop is providing the push. As long as the trend holds, the path of least resistance is up.

Final Thoughts

The Mexican equity market has been overlooked for too long, but with this breakout, it’s time to pay attention. If you’re looking for exposure to a market that’s benefiting from global macro trends and finally showing technical strength, this is your moment.

Traders who understand how to ride trends should be all over this. We’ve got the right technicals, the right fundamental story, and a solid ETF to capture the move. The only thing left is execution. With the market absolutely horrible for options (there are options, the spreads are just wider than my last 3am yawn), they do exist. Just expect to pay through the nose on slippage in exchange for the leverage. The average daily volume is about ⅛ of 1% of that of the SPY (S&P 500 ETF), so expect to wait a bit to get a position on or accept heavy slippage.

This article was written in the U.S. by a guy that’s 37.5% French on a keyboard designed in Germany but made in China on a desk designed in Sweden and manufactured in Indonesia with a computer that was assembled in the U.S. with parts from all over the world. It’s a global economy, and we’re betting Mexico is about to find a better foothold.

Disclaimer: The author is long FLMX.