Mexico’s stock market is a deeply undervalued opportunity, analysts say

Investing.com — Despite enduring political and economic challenges Mexico’s equity market represents a compelling opportunity for long-term investors due to significant undervaluation relative to global peers and historical benchmarks.

The Mexican peso has depreciated over 20% since mid-2024, driven by political uncertainties under President Claudia Sheinbaum’s administration and heightened trade tensions with the re-elected U.S. President Donald Trump. These factors have led to a risk premium for Mexican assets, further depressing valuations in the country’s stock market.

According to Barclays (LON:), the valuation gap between Mexican equities and other emerging market indices offers a unique entry point. While political and economic noise has impacted market sentiment, the fundamentals of many Mexican corporations remain solid.

Companies like Gruma SAB de CV (OTC:), Wal Mart de Mexico SAB de CV (BMV:), and Coca-Cola (NYSE:) Femsa SAB de CV (BMV:) have been highlighted as resilient performers, with analysts upgrading their ratings due to strong operational metrics and favourable foreign exchange dynamics. Gruma, for example, is set to benefit from a competitive export position as the weaker peso boosts revenue in dollar-denominated sales.

Barclays analysts anticipate that political tensions may ease in the second half of 2025, stabilizing the business environment and enhancing consumer confidence. Reduced FX volatility and improving macroeconomic conditions could provide the catalyst needed for a market rebound.

The MSCI Mexico Index and Mexbol continue to trade at a significant discount compared to other emerging markets, reflecting more on uncertainty than corporate performance, analysts said. This presents an opportunity for investors willing to navigate short-term volatility for potential long-term gains.