Bloomberg -The rise of a hostile U.S. president sent stocks, bonds and the peso reeling. That was then. There’s now reason to think that the Trump effect on Mexican markets might be about to run its course.
https://www.bloomberg.com/view/articles/2017-06-19/trump-effect-crests-in-mexican-markets
Financial Times – Vista Oil & Gas, a special purpose acquisition vehicle (SPAC) backed by Riverstone Capital and Miguel Galuccio, the former boss of Argentine state oil company YPF, has filed a prospectus for an initial public offering in Mexico.
https://www.ft.com/content/dfa4277f-6af6-3827-8716-2b71fc1537b2
Reuters – Mexico’s central bank chief said the bank has altered course on how to protect the peso after a couple of tweets by U.S. President Donald Trump in early January pummeled the currency to near historic lows and wiped out the effect of a $2 billion currency intervention.
Reuters – Mexico is closely looking for windows of opportunity to issue more debt and improve its loan portfolio, Finance Ministry Undersecretary Vanessa Rubio said. Mexico last week announced a new $3.15 billion 10-year bond issue, its first transaction in the dollar bond market this year.
Live Mint – Mexico is the most attractive emerging market for investors, based on a range of metrics analyzed by Bloomberg including growth, yields and equity valuations. India is the worst.
By Joe Chidley / Financial Post
A surface reading of the Donald Trump’s impact on the global economy suggests that there is one clear and present loser: Mexico. The new president has hurled so many threats down Mexico way, it’s actually hard to remember all of them.
Let’s see, there’s the wall (which he’ll get Mexico to pay for, somehow), and the “big border tax” on Mexican imports, and also the broader border adjustment tax on all imports. There’s NAFTA renegotiation (which, we Canadians like to think, will hurt Mexico more than us) and the crackdown on undocumented immigrants, and the snubs to Mexico’s leadership.
I’m probably missing something, but even that short list adds up to bad news for NAFTA’s third amigo, right? You would think investors must be running for the hills.
And for a time, they did: In the 10 days following Trump’s Nov. 8 victory, the Mexican Bolsa index, or Mexbol, fell off a cliff, plummeting 8.5 per cent and sealing Mexico’s fate as one of the 10 worst-performing markets in the world in 2016.
The story since then, however, provides an interesting counter-story to all the bad news for Mexico. In fact, despite all the doom-and-gloom and the threats from the White House, investors in the Mexican market have been doing rather well, thank you.
Last Friday, the iShares MSCI Mexico ETF – a popular entry point to the Mexican market for outside investors – rose 1.5 per cent, putting the fund’s three-month return near 13 per cent.
More remarkable, perhaps, was that the Mexbol hit (and then surpassed) 48,470 — where it sat at end of day on Nov. 8, 2016, when Hillary Clinton was still widely expected to become the next president of the United States.
So, you might ask yourself, what happened to the Trump effect? Well, this might be in part a case where the disease is part of the cure — namely, the impact on the Mexican peso and the boost it has given to Mexico’s export competitiveness.
Bloomberg – With White House officials saying they’re confident a trade deal can be reached to benefit both Mexico and the U.S., the peso has regained more than half of the losses it saw after Donald Trump’s victory pushed it to record lows. Talks aren’t expected until late this year, allowing investors to turn their attention to the next big risk for the Latin American country: a presidential win by opposition candidate Andres Manuel Lopez Obrador, known as Amlo.
Financial Times – The Mexican peso pushed higher on Wednesday after Donald Trump’s top trade adviser, Peter Navarro, issued upbeat remarks on the country, toning down the administration’s often heated rhetoric regarding America’s neighbor to the south.
https://www.ft.com/content/7aec84d3-97df-3c2b-8362-c03d8f2faed8
Bloomberg – Strong demand for contracts that protect from declines in Mexico’s peso shows lingering concern the currency is vulnerable to a fresh selloff after a six-week rally.
Reuters – The Mexican peso rallied on Friday to its strongest level since the day following the U.S. presidential election after U.S. Secretary of Commerce Wilbur Ross said that a sensible trade deal with Mexico will help its battered currency. The peso strengthened to 19.5200 per dollar.
Bloomberg – Shares of Jose Cuervo, the world’s biggest tequila maker, sold for 34 pesos each, the high end of the projected range, said people, who asked not to be identified. Cuervo’s $791 million offering makes it the country’s largest IPO in dollar terms since Grupo Lala raised an initial $938 million in October of 2013.
Financial Times – Aberdeen Asset Management and Franklin Templeton Investments are among asset managers pushing Mexican authorities to overhaul two practices they say are harming investor confidence in a country that has been in global crosshairs since US president Donald Trump took office earlier this month.
https://www.ft.com/content/91820a10-e6bc-11e6-893c-082c54a7f539
CNBC – Jose Cuervo, the world’s biggest tequila producer, is planning a Feb. 8 pricing for its delayed initial public offering (IPO) in a bid to raise up to $1 billion, two sources familiar with the matter said on Monday.
http://www.cnbc.com/2017/01/23/mexicos-jose-cuervo-planning-february-ipo.html
WSJ – Global investors are fleeing Mexico’s financial markets, sending the peso to record lows on mounting concerns that Donald Trump’s trade policy could end the country’s privileged status among developing countries.
http://www.wsj.com/articles/investors-bolt-mexico-as-peso-enters-free-fall-1484130602
Reuters – Mexico’s central bank confirmed it had sold dollars during the Asian trading session on Friday, its second intervention the day after it did the same during Mexican and U.S. trading hours to fight a slump in the peso. At 7:45 a.m. Mexico City time, the peso was up 0.53 percent at 21.31 pesos per dollar.
http://www.reuters.com/article/us-mexico-economy-idUSKBN14Q1KU
Fox -The bloodbath in Mexican assets following Donald Trump’s unexpected rise to the U.S. presidency has some seeing a buying opportunity. Others fear the worst is yet to come.
http://www.foxbusiness.com/markets/2016/11/11/how-to-profit-from-mexicos-trump-slump.html
Reuters – Mexico’s peso remained under pressure on Wednesday morning, weakening past 20 pesos per dollar after Donald Trump’s surprise U.S. presidential election win, but local authorities held off announcing any immediate mitigating economic measures.
Reuters – Mexico’s currency and stocks fell on Thursday as traders bet that a closely watched U.S. employment report due on Friday will strengthen the case for an interest rate increase this year.
http://www.reuters.com/article/emerging-markets-latam-idUSL2N1CC2CF
Reuters – Infraestructura Energetica Nova will offer about $350 million in a primary stock offering later this month, the firm said on Monday. The offer will consist of 323 million shares, but could rise to 380 million shares, including over-subscription options and additional placement options. The company, known locally as IEnova, is a unit of U.S. firm Sempra Energy.
By Michelle Davis / Bloomberg
The seven-year bull run in Mexican stocks might be coming to an end.
Strategists and investors are tempering their expectations as corporate profits slide, economic growth slows and the U.S. presidential election rattles investors.
UBS expects a 10 percent drop in the IPC index by the end of the year. BTG Pactual cut its recommendation on Mexican stocks to underweight last week. Barclays says valuations are bound to fall.
This month, Mexico’s biggest stock ETF has seen the largest withdrawals in two years.
The increasingly bearish sentiment is closely tied to a rout in the peso that has made it the worst performing major currency amid prospects that Donald Trump will win the U.S. presidential election and make good on pledges to renegotiate trade accords.
While the peso has recovered from record lows, international investors have been hit hard in recent weeks. The IPC index has fallen 3.4 percent in dollar terms since the Republican convention, compared with a 5 percent gain in the MSCI Emerging Markets stock index.
“Things have changed and it makes it very difficult to predict where we might end up by year-end,” said Benjamin Theurer, an equity analyst at Barclays in Mexico City. “At the beginning of the year, I wasn’t considering Trump would actually make it to be a nominee. It’s going to be volatile.”