MEXICO CITY (Dec. 21, 2025) — The Mexico Stock Exchange is heading into the final full week of the year with a simple, slightly surreal message for investors: the rally is still alive, but it’s no longer effortless.
Mexico’s benchmark S&P/BMV IPC index ended the last session before the weekend at 63,966.98 points, a hair below this month’s all-time highs. The finish capped a strong 2025 performance, even as the market posted a weekly pullback and traders recalibrated around three big drivers now shaping the near-term narrative: easier monetary policy from Banxico, an eye-catching airline mega-merger, and a growing debate over whether 2026 is a “grind higher” year—or a “reality check” year for valuations. [1]
Where the Mexico Stock Exchange stands heading into year-end
Friday’s close left the IPC within striking distance of its record high of 65,250.14, set earlier this month. The headline number matters for psychology—new highs tend to attract flows—but the way the market got there matters more: 2025’s climb has increasingly looked like a mix of global risk appetite and selective local catalysts, rather than a broad-based domestic growth boom. [2]
Even with the year still firmly positive, the week ended with a loss of about 1.15%, and the IPC’s 2025 gain was around 29% (with December modestly positive). That’s a reminder that Mexico’s market can sprint, but it doesn’t always run in a straight line—especially when global equities wobble. [3]
Trading activity also remained healthy. On the day, turnover reached 745.5 million shares worth about 49.7 billion pesos, underscoring that liquidity is there when catalysts hit (and when large institutional players need to move). [4]
Banxico cuts to 7.00% — cheaper money, but not “mission accomplished”
The macro headline shaping Mexican assets right now is Banco de México’s decision to cut the overnight interbank rate by 25 basis points to 7.00%, effective Dec. 19. The vote was 4–1, with Deputy Governor Jonathan Heath dissenting in favor of holding rates. [5]
For equity investors, the rate cut is a two-sided coin:
- On one hand, lower rates typically support equity valuations by reducing the discount rate applied to future earnings and by improving financing conditions.
- On the other hand, Banxico didn’t cut because everything is booming. The central bank described economic activity as weak and highlighted uncertainty tied to trade tensions and policy shifts abroad. [6]
Inflation remains the speed bump. Banxico noted that headline inflation rose to 3.80% and core to 4.43% (November), and it adjusted inflation forecasts upward for late 2025 and the next quarters—while still expecting inflation to converge to the 3% target by Q3 2026. [7]
That guidance matters because Mexico’s equity story in 2026 may depend less on “how fast rates fall” and more on “how long Banxico can keep easing without reigniting inflation.” Reuters polling ahead of the decision showed economists split over whether Banxico pauses early in 2026, with a median view pointing to 6.75% by March 2026. [8]
The peso: still strong, but forecasts lean toward mild weakening in 2026
Mexico’s equity performance is tightly linked to the Mexican peso, because currency stability affects inflation, rate expectations, and foreign investor appetite.
The peso ended the week around 18 per dollar, roughly flat-to-strong on the margin. [9]
Looking forward, the consensus is less “super peso forever” and more “range-bound with drift.” A Reuters poll projected the peso would remain inside its long-held 16–22 per dollar band in 2026, with a mild move weaker toward ~18.92 over the next year. [10]
Strategists at BBVA also leaned toward depreciation, recommending hedging around 18.0–18.30 and expecting a move toward 19.20 by year-end 2026, partly because ultra-low volatility rarely stays that way. [11]
Volaris + Viva Aerobus: the deal that jolted the tape
The biggest single-stock story hitting the Mexico Stock Exchange this week was the announcement that low-cost carriers Volaris and Viva Aerobus plan to merge, creating what would be Mexico’s dominant domestic airline group.
According to Reuters, the companies described a merger of equals under a new holding company structure, while keeping separate brands and operations. Executives emphasized cost synergies—especially the ability to negotiate lower aircraft acquisition and leasing costs, typically the biggest expense line for airlines. [12]
Markets reacted instantly: Volaris surged (and was among the session’s top gainers), reflecting both synergy optimism and the simple fact that investors like scale—right up until regulators start asking hard questions. [13]
Regulatory risk is real here. Reuters flagged that the combined group would control a large share of domestic traffic and that Mexico’s regulatory landscape has changed, with antitrust review now sitting in a different institutional framework than in prior years. The deal is expected to close in 2026, assuming approvals. [14]
For the broader IPC, the significance is bigger than airlines: the episode shows how Mexico’s index can be driven by idiosyncratic corporate catalysts even when macro growth is “meh.”
Winners, losers, and what the tape is really saying
Beyond Volaris, the week’s price action delivered a useful snapshot of investor positioning.
In the final session, top gainers included Volaris (+14.1%), shares of Bolsa Mexicana de Valores (BMV’s own listed stock) (+8.33%), and Industrias Peñoles (+8.31%). On the downside, notable decliners included TEAK, Televisa, and Alpek. [15]
Meanwhile, commentary cited weekly losses in heavyweights such as América Móvil, Walmex, and Grupo México, a reminder that even in a strong year, index leadership rotates—and large weights can quietly cap index momentum when they soften together. [16]
2026 forecasts: 69,200 vs. 71,000 — same direction, different confidence levels
So where do professional forecasts land as of Dec. 21, 2025?
Two widely cited targets have emerged:
- BBVA Market Strategy: 69,200 for the IPC by year-end 2026, described as a “neutral” stance—valuations “no longer cheap,” domestic fundamentals “weak,” and 2025 gains driven largely by global sentiment. BBVA estimates ~9.2% price upside plus an estimated ~4% dividend yield, with industrials expected to grow fastest, followed by staples and financials. [17]
- Actinver: 71,000 for the IPC in 2026, alongside a broader macro set of house expectations that include Mexico GDP ~1.6%, a policy rate around 6.50%, and USD/MXN ~19.20. [18]
The difference between 69,200 and 71,000 isn’t enormous—both imply upside from current levels. What matters is the underlying logic:
- BBVA’s frame is essentially: “Good year already happened; 2026 is more about carry (dividends) and select sectors than about multiple expansion.” [19]
- Actinver’s frame is closer to: “Macro tailwinds (lower rates) plus specific catalysts can still push the index meaningfully higher.” [20]
Investors should treat both as scenarios, not prophecies. Forecasting is an art practiced with spreadsheets and humility.
The exchange itself is trying to evolve — and that matters for valuation and liquidity
Zoom out one level and the story becomes even more interesting: Mexico’s public equities market has spent years fighting a perception problem—too few IPOs, notable delistings, and liquidity that can feel “concentrated” in a handful of names.
In response, Grupo BMV has been working on market-structure initiatives aimed at widening participation. Reuters reported earlier this year that the exchange operator planned to launch exchange-traded options on major U.S. stocks (including names like Amazon and Apple), traded and cleared in pesos, to capture local demand for global equities and potentially deepen retail engagement. The report also noted expectations for more small- and mid-cap activity via SPAC-style vehicles under simplified listing rules, and longer-run ambitions such as more electronic bond trading and even a path toward extended trading access. [21]
If those efforts work, they don’t just change trading—they change the strategic story investors tell about Mexico’s capital markets: from “shrinking club” to “expanding menu.”
New listings, exits, and the ongoing fight for depth
The listing pipeline remains a central issue for Mexico’s equity ecosystem.
In recent months, Mexico has seen both ends of the spectrum:
- Grupo Elektra: El País reported that BMV suspended trading after shareholders moved to take the company private, part of a broader pattern of firms leaving the public market. [22]
- Aeroméxico: El País also reported Aeroméxico’s return to public markets through a mixed global offering, listing in Mexico and the U.S., after years away following its Chapter 11 process. [23]
Add to that the Banamex storyline: Reuters reported Citi completed the sale of a 25% stake in Banamex to investor Fernando Chico Pardo, while still pointing to an eventual IPO path for the Mexican retail unit depending on conditions and approvals. A Banamex listing—if it materializes—would be one of the most significant potential additions to Mexico’s public market in years. [24]
What could derail the Mexico Stock Exchange rally in 2026?
Even with constructive targets on the table, the risk list isn’t short.
- Trade policy and tariff uncertainty
Both Banxico and BBVA explicitly highlighted trade tensions and policy uncertainty as material risks. Mexico may benefit from supply-chain shifts, but it is still deeply exposed to U.S. demand and to changes in cross-border rules. [25] - Inflation that refuses to behave
Banxico’s path to 3% inflation by Q3 2026 is a forecast, not a guarantee. Persistent services inflation—or renewed currency weakness—could force a slower easing cycle than equity bulls want. [26] - Valuation and “global sentiment risk”
BBVA warned about the possibility of a tech-driven correction globally and argued that much of 2025’s market strength reflected expensive valuations in multiple asset classes and shifting correlations. Mexico’s market, despite its local quirks, does not trade in a vacuum. [27] - Regulatory outcomes for big corporate moves
The Volaris–Viva deal is a perfect example: strategic logic can be compelling, but the final outcome depends on review processes that can be political as well as economic. [28]
The near-term setup: what investors watch after Dec. 21
With markets closed for the weekend, the immediate focus shifts to the week ahead and the year-end rebalancing season:
- Rate expectations: whether Banxico signals a pause or continued cuts in early 2026, and how quickly core inflation cools. [29]
- Peso stability: any move away from the ~18 handle can ripple through inflation expectations and equity multiples. [30]
- Corporate catalysts: updates around large transactions (like airline consolidation) and any signs of renewed issuance or listings that could deepen the market. [31]
Bottom line: as of Dec. 21, 2025, the Mexico Stock Exchange is not acting like a sleepy emerging market sidebar. The IPC is near record highs, monetary policy is easing, and credible houses are publishing 2026 targets that still imply upside—while warning that valuations, policy uncertainty, and global risk sentiment could make the path choppier than 2025’s headline return suggests. [32]
References
1. es.investing.com, 2. www.tradingview.com, 3. es.investing.com, 4. es.investing.com, 5. www.banxico.org.mx, 6. www.banxico.org.mx, 7. www.banxico.org.mx, 8. www.reuters.com, 9. es.investing.com, 10. www.reuters.com, 11. www.bbvamarketstrategy.com, 12. www.reuters.com, 13. es.investing.com, 14. www.reuters.com, 15. es.investing.com, 16. es.investing.com, 17. www.bbvamarketstrategy.com, 18. www.actinveranalisis.com, 19. www.bbvamarketstrategy.com, 20. www.actinveranalisis.com, 21. www.reuters.com, 22. elpais.com, 23. elpais.com, 24. www.reuters.com, 25. www.banxico.org.mx, 26. www.banxico.org.mx, 27. www.bbvamarketstrategy.com, 28. www.reuters.com, 29. www.reuters.com, 30. tradingeconomics.com, 31. www.reuters.com, 32. www.tradingview.com
