Mexico passes controversial judicial reform – will it hurt investors?
What will Mexico's new reform mean for investors and the country's economy?

"The corrupt judges – are they going to continue defending foreign companies that come to loot, rob and affect the economy of Mexicans?” asks Andrés Manuel López Obrador (AMLO). The outgoing Mexican president’s typically warm welcome to international investors comes as his governing Morena party consolidates power.
Morena is seeking a constitutional amendment that would replace thousands of top judges with new, elected ones. Critics say it would leave the legal system open to abuse, with judges potentially ruling on cases involving the same drug lords and politicians that contributed to their election campaigns, says Mary Beth Sheridan in The Washington Post.
The impact of Mexico's new controversial reform
The courts have long frustrated AMLO. Now Morena is eager to remove one of the last checks on its power, fuelling fears that Mexico will return to the “one-party state” model it had for most of the 20th century. Business is less willing to invest in states with capricious legal systems. There are already signs of waning confidence, with the peso dropping more than 10% against the dollar since Morena’s victory in elections in June. The local IPC stock index has shed 11% in 2024. “Mexico’s justice system is slow and often corrupt,” says The Economist.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But AMLO’s plans for all federal judges, including those on the Supreme Court, to be elected will only make things worse. Bolivia – the only other country in the world to have gone down that path – has had a “disastrous” experience with judicial elections, which have turned the courts from “a neutral arbiter” into a political “prize”.
At a time when Mexico should be cashing in on “nearshoring” of manufacturing supply chains, AMLO is instead jeopardising his country’s free-trade deal with the US and Canada, which comes up for review in 2026. Uncertainty about the reforms is already hurting investment. Company representatives “estimate that foreign firms are holding back some $35 billion in investment projects”, a figure approaching the amount that Mexico “attracts in foreign direct investment in an average year”, say Santiago Pérez and José de Córdoba in The Wall Street Journal.
IT, car manufacturing and natural gas pipeline projects are all reportedly stalled. Those with a very high-risk appetite spy an opportunity, says Craig Mellow in Barron’s. The bad news could be priced in following big falls in the peso and local stocks. Optimists are pinning their hopes on AMLO’s “cerebral” protégé Claudia Sheinbaum, who takes over the presidency next month. While a Morena loyalist, she is also pragmatic and doesn’t have her mentor’s “pugnacious” tendencies.
The reforms “will be watered down to something” the US can live with, predicts Malcolm Dorson of Global X ETFs. Then again, perhaps not.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Money tips for the end of the tax year
The tax year will end on 5 April, and your annual allowances for 2024/25 will disappear with it. Here’s how to get your finances in shape
By Katie Williams Last updated
-
India's stock market decline wipes out $1.3 trillion in market value
More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?
By Alex Rankine Published
-
Will Trump force the Fed to lower interest rates?
Opinion Markets are ignoring the risk that Donald Trump forces the central bank into reckless interest rate cuts
By Cris Sholto Heaton Published
-
London can lure Brexit-fleeing banks back to UK – but the City must move quickly
Opinion Many banks fled to Paris in the wake of Brexit but are now in full-scale retreat. The City should move quickly to lure them back, says Matthew Lynn
By Matthew Lynn Published
-
Protests erupt in Turkey after the arrest of president Erdogan's rival
Turkey's president has jailed his main political opponent, Ekrem Imamoglu
By Emily Hohler Published
-
What is the Mar-a-Lago Accord and why is it getting attention from Wall Street?
On Wall Street, there is talk that Trump's tariffs aim to make the world’s leaders come crawling to Mar-a-Lago, his Florida residence
By Alex Rankine Published
-
Spring Statement: Rachel Reeves 'must turn good intentions into effective measures'
Opinion Chancellor Rachel Reeves understands the economy’s structural problems but is unlikely to solve them, says Max King
By Max King Published
-
England's department stores return – but do they have a future?
Opinion The great traditional retail shops of Middle England have bounced back for now. Don’t get too carried away though, says Matthew Lynn
By Matthew Lynn Published
-
Can investors stay optimistic about Russian stocks?
Investors look to profit from Russia as Trump pushes for peace in Ukraine. But is it worth the risk?
By Alex Rankine Published
-
Labour's 'Project Chainsaw' begins by abolishing NHS England – will it backfire?
Keir Starmer is taking the fight to the blockers, the NIMBYs, public sector workers and the unions says Emily Hohler. What happens if Labour fails to deliver?
By Emily Hohler Published