{"id":58315,"date":"2023-09-08T01:17:16","date_gmt":"2023-09-08T05:17:16","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/no-matter-who-wins-mexicos-election-markets-will-be-happy\/"},"modified":"2023-09-08T01:17:19","modified_gmt":"2023-09-08T05:17:19","slug":"no-matter-who-wins-mexicos-election-markets-will-be-happy","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=58315","title":{"rendered":"No Matter Who Wins Mexico&#8217;s Election, Markets Will Be Happy"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000739107\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>You might not know it from listening to the U.S. chatter, but Mexico is in good hands.\u00a0<\/p>\n<p>The latest political news from our southern neighbor was no surprise: The governing Morena party tapped former Mexico City Mayor Claudia Sheinbaum as its candidate to succeed Andres Manuel Lopez Obrador in presidential elections next June. What is surprising is the sound economy that AMLO, as the incumbent leader is known, looks set to leave behind.\u00a0<\/p>\n<div class=\"paywall\">\n<p>Mexican gross domestic product is on track for a second year of 3% growth. The<br \/>\n        iShares MSCI Mexico<br \/>\n      exchange-traded fund (ticker: EWW) has climbed by a quarter over the past 12 months. The peso is up 14% against the dollar, even as the greenback dominates most world currencies. Inflation has halved to 4.6% annually, leaving the central bank plenty of room to cut its 11.25% prime rate.\u00a0<\/p>\n<p>Not bad for a self-proclaimed leftist revolutionary.<\/p>\n<p>Neither Sheinbaum nor her principal opponent, center-right coalition candidate Xochitl Galvez, threatens to botch this legacy, so far as markets can tell. \u201cMexico should be seen as a geopolitical opportunity, not a problem,\u201d says Matt Gertken, geopolitical strategist at BCA Research. \u201cYou\u2019re looking at two credible candidates to take over.\u201d\u00a0<\/p>\n<p>The opponents-to-be have a lot in common, aside from being female and nearly the same age. Both have their roots in engineering with a tilt toward sustainability.\u00a0Sheinbaum, 61, earned a Ph.D. in energy engineering and contributed to the pioneering Intergovernmental Panel on Climate Change. Galvez, 60, was a programmer who founded a company designing intelligent buildings before turning to politics.\u00a0<\/p>\n<p>Sheinbaum, though regarded as AMLO\u2019s handpicked heir, lacks her mentor\u2019s penchant for personal public feuds, notably with business leaders. \u201cShe\u2019s less combative,\u201d says Malcolm Dorson, head of emerging markets strategy at Global X exchange-traded funds. \u201cI don\u2019t see her calling people out on the national stage.\u201d<\/p>\n<p>Galvez, though a pro-business entrepreneur, also plays on her upbringing in a poor indigenous family.\u00a0\u201cThere will be a race for who can sound more populist,\u201d says Sarah Glendon, senior sovereign analyst for Latin America at Columbia Threadneedle Investments. \u201cBut I\u2019m not very concerned about a major shift in policy-making.\u201d<\/p>\n<p>AMLO\u2019s great achievement, from markets\u2019 point of view, has been more-or-less pulling off his program of \u201crepublican austerity.\u201d Social spending\u2019s share of Mexico\u2019s federal budget has more than tripled without a \u201cfiscal blowout,\u201d Gertken says. The deficit-to-GDP ratio has doubled during Lopez Obrador\u2019s tenure to more than 4%. But investment inflows have kept government debt to an acceptable 50% of GDP.\u00a0<\/p>\n<p>Investors and the public are both happy so far. AMLO heads into his final year with 60% approval ratings, making Sheinbaum the favorite to succeed him. (Mexican presidents are constitutionally limited to a single six-year term.)\u00a0\u00a0\u00a0\u00a0<\/p>\n<p>AMLO\u2019s biggest shortcoming has been a perceived hostility toward private enterprise, which may have kept Mexico from jumping more aggressively on \u201cnearshoring\u201d opportunities as U.S. corporations look for alternatives to Chinese supply chains. \u201cThere\u2019s lots of optimism about nearshoring, but we haven\u2019t seen it come through yet,\u201d Glendon says.\u00a0<\/p>\n<p>Softer rhetoric from the next president might improve the climate somewhat. \u201cMexican management teams are very much looking forward to change no matter who it is,\u201d Dorson says.\u00a0<\/p>\n<p>Some policy changes are also called for though\u2014particularly reopening Mexico\u2019s oil and gas sector to foreign investors. This opening was a key achievement of AMLO\u2019s predecessor, Enrique Pe\u00f1a Nieto. AMLO restored the monopoly of state driller Pemex. There\u2019s not much hope Sheinbaum would reverse her mentor on such an emotional issue.\u00a0<\/p>\n<p>Eight of Mexico\u2019s top 10 nearshoring investments are in the automotive sector, Dorson reports,<br \/>\n        Tesla<span>\u2019s<\/span><br \/>\n       (TSLA) $5 billion commitment in the northern state of Nueva Leon being by far the largest. Signs of diversity to other industries are scant.\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n<p>Dorson is all in on the nearshoring story nonetheless. \u201cWe keep pounding the table that India and Mexico are the best structural opportunities in emerging markets,\u201d he says.\u00a0<\/p>\n<p>He\u2019s investing in stocks geared to macroeconomic growth, like No. 2 bank<br \/>\n        Grupo Financiero Banorte<br \/>\n       (GFNORTEO.Mexico), which offers a 7.5% dividend yield at \u201cincredibly attractive valuations,\u201d retailer<br \/>\n        Wal-Mart de Mexico<br \/>\n       (Walmex.Mexico), and developer<br \/>\n        Corp Inmobiliaria Vesta<br \/>\n      (VESTA.Mexico).\u00a0<\/p>\n<p>Approaches to Mexican fixed income depend on when you think the central bank might start an easing cycle. Banxico, as it is known, kept hiking even as inflation dropped early this year, setting up a highly attractive \u201ccarry\u201d trade to support the peso.\u00a0\u00a0<\/p>\n<p>Fund managers at<br \/>\n        Artisan Partners<br \/>\n       see cuts coming no later than February, making now the time to shift out of the peso into bonds, whose prices rise as interest rates fall. \u201cWe like local rates a lot and expect a rally as Banxico changes its policy stance,\u201d they tell <em>Barron\u2019s.<\/em><\/p>\n<p>What\u2019s clear is that Mexico heads toward the end of the AMLO era in better shape than markets feared at the start.\u00a0\u00a0<\/p>\n<p>Write to editors@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/no-matter-who-wins-mexicos-election-markets-will-be-happy-82734e0c?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>You might not know it from listening to the U.S. chatter, but Mexico is in good hands.\u00a0 The latest political news from our southern neighbor was no surprise: The governing Morena party tapped former Mexico City Mayor Claudia Sheinbaum as its candidate to succeed Andres Manuel Lopez Obrador in presidential elections next June. What is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":58316,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-58315","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>No Matter Who Wins Mexico&#039;s Election, Markets Will Be Happy | iFintechWorld<\/title>\n<meta name=\"description\" content=\"You might not know it from listening to the U.S. chatter, but Mexico is in good hands.\u00a0 The latest political news from our southern neighbor was no\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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