Foreign investors registered net outflows of USD0.28bn from Mexican sovereign bonds in June - marking the third consecutive month of withdrawals, although smaller than the outflows seen in April and May. Outflows were concentrated in Cetes (USD0.65bn) and Udibonos (USD0.54bn) while foreigners only added moderate inflows of (c.USD 0.90bn) in Mbonos. Total foreign outflows from MBonos, Udibonos, and Cetes YtD have reached USD2.21bn. Offshore participation in government securities remains on a long-term downtrend, as it fell to 12.6% in June – the lowest level in over 15 years - with holdings in MBonos, Cetes, and Udibonos now at 28.4%, 9.2%, and 3.8%, respectively.
On the domestic side, local investors - particularly pension funds and other institutions - continued to support demand. Inflows from other local investors totaled USD10.33bn, broadly allocated across Bondes, Udibonos, Cetes, and MBonos. Pension funds added USD4.96bn, with appetite spread fairly evenly across the aforementioned instruments. Local banks posted a modest increase of USD0.65bn, while mutual funds registered outflows of USD0.72bn, driven mainly by reductions in Cetes.
Mutual funds, pension funds, and other local institutions were the main buyers of sovereign bonds in the first half of 2025, with cumulative inflows of USD13.52bn, USD12.42bn, and USD9.46bn, respectively. This highlights the resilience of domestic demand even as foreign interest wanes.
In terms of Mexican equities, foreign investors also withdrew USD1.08bn in June, despite the IPC’s continued outperformance. Equity outflows now total USD4.41bn YtD.
Looking ahead, with Banxico expected to continue easing, albeit at a more moderate pace, we still see room for adjustment, particularly around the 5Y. Foreign appetite has remained muted despite the recent MXN appreciation. Going forward, macro uncertainty may continue to limit foreign appetite for local assets.