Emerging market fund managers, details the medium, are reconsidering investments in Mexico or reducing exposure.
“The Mexican President-elect, Lopez Obrador, is frightening foreign investors,” is the title of the newspaper The Wall Street Journal in which he explains that the market is losing the certainty about the coming to power of AMLO, which it will be official this Saturday, December 1st.
The American newspaper mentions that after the victory of Tabasco at the polls, investors were willing to give the benefit of the doubt to their management, which led to a recovery of Mexican peso and shares; nevertheless, the cancellation of the New Mexico International Airport and the announcement of the public consultations that leave the decision on key issues in the hands of the population would have generated questions about the economic management of the new government.
“I think that López Obrador has shown his true colors. (…) He has not even assumed the position of President and is showing a real authoritarian run, “said Walter Molano, chief economist at BCP Securities, who, together with other emerging market fund managers, details the medium, is reconsidering the investments in Mexico or reducing exposure.
With a pragmatic victory speech, AMLO promised to keep Mexico’s finances under control and appointed a businessman as chief of staff, Alfonso Romo, and a respected economist responsible for public finances, Carlos Urzúa.
“We invest in the long term in Mexico and it’s affecting us, to be honest,” said Paul McNamara, who operates an emerging markets bond for Swiss asset manager GAM Holding and says he is looking to reduce its Mexican assets.
Since the cancellation of the NAIM, the peso has been among the currencies of emerging markets with the worst performance in the world, falling more than 5% against the dollar, and Mexican shares were down 7.6% and interest rates on government bonds at 10 years increased to 9% from 7.7% on July 2. Only in October, foreign investors sold about 2.4 billion dollars in Mexican bonds, the WSJ said.
“It has been like a bucket of cold water … for those who thought that AMLO would be pragmatic,” said Marco Oviedo, chief economist for Latin America at Barclays.
More bad news could lead to a broader sale, says the US newspaper: “My recommendation for investors is basically going out,” said Molano. “When people start running towards the door there will be a panic.”
Source: Forbes Mx
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