MARKETS
The IPC index of Mexico’s top 35 stocks closed January 26 at 55,189 pesos, up 3.8% from its January 19 close of 53,383. The impressive 13.38% year-to-date increase in the IPC compares to S&P500’s more modest 5.75%.
The MXN/USD exchange rate closed at 18.80 pesos to the dollar on January 26, up from 18.99 pesos on January 19.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.70%, up from 8.56%, on January 19.
The IPC Top Stock Gainers for the week were: BBAJIOO (+12.3%), GFINBURO (+10.4%), and RA (+8.25%), and the Biggest Losers were: MEGACPO (-1.53%), ALFAA (-0.94%), and PE&OLES (-0.84%).
CORPORATE & MARKET NEWS
Femsa, the conglomerate that owns Oxxo convenience stores and bottler of the Coca-Cola system, announced that Volaris will be the first external partner in its loyalty program. This program will offer exclusive benefits to users, allowing them to accumulate and redeem reward points with Oxxo, Volaris and other potential partners, according to a statement from Femsa.
Source: El Economista
Cemex, has reached an agreement with the Canadian company Atlantic Minerals Limited in Newfoundland to purchase assets in Canada with the intention of increasing its material stock for its aggregate business in the state of Florida and cities on the east coast of the United States. According to a company statement, the acquired assets consist of a chemical and construction aggregates quarry and port operations, in line with its recent strategy to make selective purchases of high-value assets in specific markets, usually high-income cities, rather than operations in entire countries. Meanwhile, CEMEX’s Philippine subsidiary announced it would conduct a tender offer in February to acquire its shares to consolidate its interests in the company and increase its ownership stake up to 89.87%.
President López Obrador offered to help Alonso Ancira's AHMSA with its debts to the CFE, Pemex and the Treasury in exchange for the company selling its shares. According to the president, the mismanagement of the steel company is affecting both the workers and the Coahuila area.
Financiera Independencia launched an exchange offer to extend the maturity of its $250 million international bond set to mature in 2024, a move that removes pressure from its finances at a time when non-bank financiers are facing liquidity constraints.
A group of six banks operating in Mexico presented Multired, an evolution of a 2006 ATM-sharing alliance and a strategy to compete against the four largest banks in Mexico. The members are HSBC Mexico, Scotiabank, Banco del Bajío, Inbursa, Banregio and Banca Mifel, all among the 15 largest banking institutions in Mexico. The agreement was announced by the executives of the institutions during a press conference.
Mexican companies began to report 4Q 2022 earnings. So far so good. BBAJIO, REGIONAL, GMXT, Inbursa reported above consensus. Improving expectations for earnings have helped the Mexican stock market rally strongly, far outperforming global markets. The bulk of Mexican companies will report over the next two weeks.
POLITICS
INE continues to raise concerns about the difficulty of carrying out the 2024 elections with Plan B of the electoral reform, and even indicated that they are at "severe risk," since the slimming down of the electoral body and the reduction of personnel complicates the situation. Meanwhile, AMLO continues to criticize the electoral body and indicated that the officials of the institute are not democrats but careerists.
The INE ordered Mario Delgado Carrillo, president of the Morena party, and the 13 governors of the political institute to stop carrying out pre-campaign activities in favor of Claudia Sheinbaum (the head of government of Mexico City), Adán Augusto López (the Secretary of the Interior), Marcelo Ebrard (the Secretary of Foreign Affairs) and Ricardo Monreal (the coordinator of Morena's senators).
The trial of a former top Mexican law enforcement official Genaro García Luna began in a Brooklyn court this past Monday, one of the most significant drug trafficking cases since the prosecution of drug lord Joaquín “El Chapo” Guzmán. García Luna, who ran Mexico’s Center for Research and National Security before being appointed to lead the country’s security ministry – and therefore its war on drug trafficking groups – is accused of taking millions of dollars in bribes in exchange for granting protection to the violent Sinaloa cartel.
TRADE & ECONOMICS
The economy registered its largest contraction in 15 months in November, according to data released by the National Institute of Statistics and Geography (Inegi). In November 2022, the Global Indicator of Economic Activity (IGAE), which monitors the economy on a monthly basis, showed a contraction of 0.5%, with seasonally adjusted figures. The economy registered its second decline of 2022, and the largest August contraction since 2021, when it fell 1.5 percent.
Mexico reported a US$984 million trade surplus in December. Exports increased by 3.4% YOY and imports by 2.6% YOY. For all 2022, Mexico reported a trade deficit of US$26.4 billion from a deficit of US$10.94 billion in 2021.
Inflation in Mexico rebounded in the first two weeks of the year to unexpected levels. Consumer prices increased 0.46% in the first half of January compared to the previous 15 days, the highest increase in the last 8 weeks. Annually, inflation grew at 7.94%, or the lowest level since May of last year when it was at 7.65%.
The unemployment rate in Mexico remained unchanged at 3% in December, in range of levels not seen since 2005 when the unemployment rate was first recorded in Mexico.
The National Association of Supermarkets and Department Stores (Antad) expects a slowdown in sales of its affiliates during 2023, due to a complicated economic outlook and persistently high inflation. For this year, the association, which groups chains such as Chedraui, La Comer and Soriana supermarkets together, as well as Liverpool and Palacio de Hierro department stores, expects a nominal growth of 5.2% for same-store sales and 8.3% for total stores. For December ANTAD reported Same-Store Sales: Index +9%; Self-Service +9.9%; Department +8.3%; Specialized +9% boosted by inflation.
The airline industry called on the Mexican government to work on a joint plan to transfer cargo operations from the Mexico City International Airport to other airports in the country, mainly the Felipe Angeles Airport (AIFA). The International Air Transport Association (IATA) said that AMLO's imminent decree to suspend cargo flights at the Mexico City airport within 90 days to reduce its saturation, is not feasible and may cause operational disruptions.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Senators Urge Biden on Mexico, Canada Trade Compliance
26/01/2023, Bloomberg, Eric Martin
Mexico City’s crumbling metro system casts shadow on mayor’s 2024 ambitions
26/01/2023, The Guardian, Oscar Lopez
Bank of Mexico should discuss decoupling from U.S. Fed, says Mejia
25/01/2023, Reuters, Staff
Mexican energy companies lag methane emission rules, investigators say
25/01/2023, Reuters, Stefanie Eschenbacher
El Chapo Protector’s Promotion a Bonanza for Cartel, Jury Told
24/01/2023, Bloomberg, Patricia Hurtado
Mexico early-January prices exceed market forecasts, rate hikes expected
24/01/2023, Reuters, Brendan O'Boyle and Gabriel Araujo
Taiwan's Foxconn and others accelerate investment in Mexico - Nikkei
24/01/2023, Reuters, Staff
US Says Mexico’s Planned Corn-Import Law Change Insufficient
23/01/2023, Bloomberg, Eric Martin
Former top Mexican official took millions in bribes from cartel, prosecutor says
23/01/2023, The Washington Post, Shayna Jacobs
Analysis: Mexico City metro exposes "Achilles heel" of mayor's presidential dreams
23/01/2023, Reuters, Cassandra Garrison/ Dave Graham
Colombia, ELN rebels to resume peace talks in Mexico in February
21/01/2023, Reuters, Mayela Armas/ Luis Jaime Acosta
U.S. aviation authority FAA opens office in Mexico
20/01/2023, Reuters, Kylie Madry/ David Shepardson
Mexican central banker says 'it is clear' economy is slowing
20/01/2023, Reuters, Staff