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.
-
Inheritance tax reforms: government urged to rethink curbs on rural reliefs
MPs want the government to delay changes to inheritance rax reliefs for farmers
-
‘I’m among the thousands of millionaires leaving the UK – the new tax rules don’t make sense ’
MoneyWeek spoke to a serial entrepreneur who is leaving the UK following the abolition of the non-dom tax status
-
What will the unravelling of US-China trade mean for the economy?
What will a US-China decoupling mean for the global economy?
-
What's next for Liberal Mark Carney after Canadian election win
Mark Carney will remain as Canadian prime minister after winning the country's election, despite falling short of a majority.
-
Could Javier Milei bring Argentina's economy back to 'normal'?
Javier Milei, president of Argentina, has been in office for more than 500 days. What will his leadership mean for the economy?
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'
Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industry
Opinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffs
The majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?
Donald Trump wants to plant the US flag on Mars. Could humans really live there?