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.
-
Crypto assets of seven million UK investors at risk – how to keep yours safeCryptocurrency wallet rules make it hard to track down assets after someone has died, even if they leave a will saying who they would like to inherit them
-
Could DeepSeek boost China tech stocks?DeepSeek appears to have been and gone as far as the stock market’s reaction is concerned, but Chinese tech companies are eagerly embracing advances in AI
-
8 of the best properties for sale with kitchen gardensThe best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
The rise of Robin Zeng: China’s billionaire battery kingRobin Zeng, a pioneer in EV batteries, is vying with Li Ka-shing for the title of Hong Kong’s richest person. He is typical of a new kind of tycoon in China
-
Europe’s forgotten equities offer value, growth and strong cash flowsOpinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
