Mexico’s president Andrés Manuel López Obrador (“AMLO”) is halfway through his six-year term, says Nathaniel Parish Flannery in Forbes. The economy is in poor shape. GDP shrank by 8.3% last year and the recovery has been bumpy, with the economy contracting by 0.4% in the third quarter. Resilient exports have bolstered growth (more than three-quarters of Mexican exports go to the US). Yet business leaders are increasingly opting to build new factories in India or southeast Asia rather than right on America’s doorstep.
Yet US-China tensions and the post-pandemic push to simplify supply chains present Mexico with a “golden opportunity”, says The Economist. The country’s manufacturing wages are lower than China’s. Mexico has clusters of excellence in sectors such as cars and aerospace. Parts of the north enjoy growth rates comparable to Asia. Yet foreign direct investment lags competitors such as Brazil. AMLO has scared away investors by tearing up contracts and protecting inefficient state-owned energy firms.
AMLO’s popularity rests on the perception that he is not involved in the graft that blights so much of Mexican life, says Christine Murray in the Financial Times. “Transparency International ranks Mexico in 124th place of 180 countries.” But the president’s obsession with penny-pinching has deprived anti-corruption prosecutors of the resources they need. Worse, some suspect that corruption is being used as a way to clamp down on government critics, while allies get off with a slap on the wrist.
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
A shrinking stockmarket
The central bank is next in AMLO’s sights. A debt crisis prompted Mexico to make the central bank independent in 1994, say Anthony Harrup and Santiago Pérez in The Wall Street Journal. Since then, the Bank of Mexico has built a reputation as a guardian of macroeconomic stability. It has hiked interest rates four times since June in an effort to get inflation – currently more than 6% – under control. Yet AMLO has upset investors by picking a little-known deputy finance minister with no monetary policy experience as the next bank governor. The appointment is typical of an administration that runs on connections rather than merit.
The benchmark IPC index has gained 13% so far this year, better than the emerging-market average. Yet traders are increasingly deserting the Mexican Bolsa, says Michael O’Boyle on Bloomberg. Only six IPC stocks had an average daily trading volume of at least $10m in October, down from 16 in 2013. $10m is “an informal threshold for international funds”, who need to be sure they can find buyers and sellers to trade with. In 2001 Mexican stocks accounted for 13% of the MSCI Emerging Markets index, but that has fallen to just 2% today. The index has gone 16 months without an initial public offering. Latin American asset managers see better opportunities in Brazil.
-
ISS backs Edinburgh Worldwide’s board as Saba questions SpaceX selloffShareholder advisor ISS has recommended that shareholders vote against Saba’s proposals to replace the board of the Baillie Gifford-managed investment trust
-
13 tax changes in 2026 – which taxes are going up?As 2026 gets underway, we look at what lies ahead in terms of changes to tax rates and allowances this year and how it will affect you.
-
'Investors will reap long-term rewards from being bullish on UK equities'Opinion Nick Train, portfolio manager, Finsbury Growth & Income Trust, highlights three UK equities where he’d put his money
-
The graphene revolution is progressing slowly but surely – how to investEnthusiasts thought the discovery that graphene, a form of carbon, could be extracted from graphite would change the world. They might've been early, not wrong.
-
A strong year for dividend hero Murray International – can it continue its winning streak?Murray International has been the best-performing global equity trust over the past 12 months, says Max King
-
The shape of yields to comeCentral banks are likely to buy up short-term bonds to keep debt costs down for governments
-
The sad decline of investment clubs – and what comes nextOpinion Financial regulation and rising costs are killing off investment clubs that once used to be an enjoyable hobby, says David Prosser
-
How to profit from the UK leisure sector in 2026The UK leisure sector had a straitened few years but now have cash in the bank and are ready to splurge. The sector is best placed to profit
-
Who won the streaming wars?The battle of the TV and film streaming giants for dominance looks to be entering a final phase. The likely winner may surprise you, says Simon Wilson
-
'Investors should expect a good year for equities'Opinion The economy is positive, and investors are still cautious, says Max King
