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.
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
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.
-
December 2023 NS&I Premium Bond winners - check now to see what you’ve wonIf you hold money in NS&I Premium Bonds, you can check from today (2 December) to see if you have won in the December prize draw. Here’s how to check.
-
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
-
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
-
Can Lidiane Jones be Bumble's perfect match?
Dating app Bumble is taking on Lidiane Jones, a well-regarded leader in tech, as its new boss. Can she work her magic in a new arena?
-
Are corporate bonds a good bet?
Corporate bonds pay a slightly higher yield than governments, but spreads aren’t generous by past standards.
-
SoftBank’s shares slump on quarterly loss
Japanese investment group SoftBank’s technology funds have struggled, not least because of an investment in WeWork.
-
M&S shares shift from frumpy to fabulous as pre-tax profits are up by 56%
M&S is performing strongly and has announced it will pay a dividend for the first time since the pandemic.
-
The rise and fall of Sam Bankman-Fried – the “boy wonder of crypto”
Why the fate of Sam Bankman-Fried reminds us to be wary of digital tokens and unregulated financial intermediaries.
-
Three defence stocks set to flourish in an era of instability
A professional investor tells MoneyWeek where he’d put his money. Tom Bailey highlights three defence stocks that look promising.
-
EasyJet shares rise after record results
The EasyJet group has shrugged off the cost-of-living crisis, restarted dividends and shares look good value.
