Mexico’s stock market is a very undervalued opportunity, analysts say. By Investing.com

Investing.com — Mexico’s equity market presents a compelling opportunity for long-term investors due to its significant undervaluation relative to global peers and historical benchmarks.

The Mexican peso has depreciated more than 20 percent since mid-2024, fueled by political uncertainty under President Claudia Schinbaum’s administration and escalating trade tensions with re-elected US President Donald Trump. These factors have resulted in a risk premium for Mexican assets, depressing valuations in the country’s stock market.

As he says Barclay (LON: ), the valuation differential between Mexican stocks and other emerging market indices provides a unique entry point. While political and economic noise has affected market sentiment, the fundamentals of many Mexican corporations remain strong.

Companies such as Gruma SAB de CV ( OTC: ), Wal Mart de Mexico SAB de CV ( BMV: ) and Coca-Cola ( NYSE: ) Femsa SAB de CV ( BMV: ) stood out as strong performers, and analysts upgraded their performance. Ratings given due to strong operating parameters and favorable foreign exchange volatility. For example, Gruma is poised to benefit from a competitive export position as the weaker peso against the dollar boosts sales revenue.

Barclays analysts expect political tensions to ease in the second half of 2025, stabilizing the business environment and boosting consumer confidence. A reduction in FX volatility and improving macroeconomic conditions could provide the necessary stimulus for market recovery.

The MSCI Mexico index and Mexball continued to trade at a steep discount compared to other emerging markets, reflecting greater uncertainty over corporate performance, analysts said. This provides an opportunity for investors looking for short-term volatility for long-term gains.