There have been two months of foreign capital flight

In November, foreign investors sold 10.4 billion pesos in bonds backed by the federal government, and two consecutive months of foreign capital flight accumulated, according to data from the Bank of Mexico (BdeM).

The liquidation of these values ​​was less than that reported during October, when the largest leakage of the year was observed: 71,500 million pesos.

According to information from the central bank, from January to November the holding of government securities in the hands of foreigners amounted to one trillion 762 billion pesos.

This debt is made up of M bonds, Udibonos, Federal Government Development Bonds (Bondes), Federal Treasury Certificates (Cetes) and other investment instruments issued by the Mexican State.

When foreign investors acquire debt it counts as a capital inflow, and if they sell it it is reported as a foreign capital outflow.

Analysts from the financial sector point out that almost at the end of the year the Mexican government securities and fixed income market continues with capital outflows, a trend that could continue, given the new risks that have arisen at the national level and, above all, in the international.

An analysis by Intercam indicates that the capital outflow in November was the result of a decrease in the holding of Cetes, with an outflow of 3 billion pesos; bonds (4.8 billion) and Udibonos (2.2 billion).

On the other hand, the acquisition of Bondes D increased by 71 million pesos last month.

Intercam specialists specified that in 2024 the capital outflow amounts to 26,300 million pesos, and the Bondes D and the Bonds present negative readings, with accumulated decreases of 27,600 and 35,700 million pesos, respectively.

On the positive side of the balance, the holding of Cetes by foreigners presents an increase of 27.5 billion and that of Udibonos an increase of 8 billion pesos in the year.

The analysts consulted specified that residents abroad reconfigured their portfolio of government securities, since between the end of 2023 and November 2024 the proportion of bonds in the total fell from 78.3 to 77.5 percent, that of Cetes rose from 11.2 to 12.9 percent; Udibonos went from 8.4 to 9 percent and Bondes D from 1.6 percent to practically zero.

“The government securities and variable income market in Mexico continues to register a net outflow of resources. Although long-term rates in Mexico remain high, the general tone is one of risk aversion.

“Behind this there is a complex risk situation for the country, given that public finances will end 2024 with a high deficit and the external narrative could make the path to lower inflation complex, with the threat of new rounds of tariffs and tax cuts in the United States.

It seems that, in general, the returns offered by the Mexican market have not been sufficient to trigger a new cycle of financial flow investments in Mexico, and given the uncertainty about 2025, it is possible that in the short term we will not see very different behaviorstated the Intercam experts.