Report of the General Director

There is a barrier that limits most companies to merely taking out loans, instead of bringing partners into their equity structure, or obtaining collective financing through debt issues.

We often find that many Mexican entrepreneurs, despite having built major corporations, the size of which makes them natural candidates for going public as in other countries, prefer to remain in closed structures, operating in exclusively in a family environment.

This is the paradox we face in this field: Mexico needs capital and new jobs, but for years now the imbalance we see in our equity market is not a lack of funds to invest, but rather a lack of instruments to be placed, and to finance more companies.

On the demand side, we have built up a presence among institutional investors, creating solid foundations for major investments  that can create jobs.

This does not mean that we are in a situation of such bounty that resources are excessive. But we do want to make it clear that there is enough demand to meet the needs of institutions and companies that are ready to meet the grade, and thus contribute to the supply of instruments the market requires.

In the light of this evidence, we can confidently say that our costs and requirements for obtaining financing are competitive and in line with global standards.

We have developed the distribution capacity necessary to handle major offerings, with resources from local investors and from domestic and foreign institutional investors that regularly buy into the new issues that have been coming out.

To respond to this paradox that I have described, the message for those who seek financing, regardless of their size, is simple: if your company can meet the basic principles of corporate governance, professional management and information disclosure, the financing is available.

But I might also direct a few points of constructive self-criticism to the securities industry itself:

  • We must invest a lot more in promoting new companies, and align efficiencies better to we can be more efficient in this goal.
  • We must link long-term goals to specific short-term actions, or in other words, sustain the growth of our operating business on our capacity to bring in more and new issuers.  The secondary market of tomorrow can only grow with the seeds we sow in the primary market of today.
  • We should integrate services so that every new offering is structured to guarantee its lasting success in terms of liquidity and marketability.
  • We should recognize that we have focused too much on international capital, and although we can be proud of earning the confidence of global investors and building a substantial segment of local institutional investors, we must now turn our attention to developing the middle-market range of investors.
  • Consistent with the above goals, it is fundamental that we further promote self-regulation among the institutions involved in this field: The Mexican Stock Exchange, the Mexican Derivatives Market (MexDer) and AMIB itself, pursuing in greater depth the protection of the investing public and the market's many participants.

To my esteemed colleagues, I want to reiterate the commitment of those of us who make up the AMIB, to keep up this momentum toward the expansion our market requires, to benefit society and to improve the performance of our economy.

In 2007, we have developed a new thesis on broadening the scope of the securities market in Mexico, and we have been gradually attracting new disciples to the fold. These include the business organizations grouped into the Business Coordinating Council, who have over time become more convinced of the importance of integrating basic principles of corporate governance, not only to make management more professional, but to be better prepared to compete in the international arena.

As part of this thesis, we have confirmed and assembled information showing that within the world's emerging markets, Mexico faces a two-pronged challenge.  First, we must deal with the pressing issues of development that are constantly debated on the national political stage: growth and social development that can translate into jobs and public welfare, in turn leading to higher consumption and standards of living for broad segments of the population, confronting the raw indicators of poverty with which we are all too familiar.  But we must also do this amid rising competition, the result of the implacable and inevitable process of globalization. >>

 

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