Markets
The IPC index of Mexico’s top 35 stocks closed February 9 at 49,652.80, down -7.84% from its February 2 close of 53,874.91. The 8.95% year-to-date increase in the IPC compares favorably to S&P500’s 6.30% increase.
The MXN/USD exchange rate closed at 19.65 pesos to the dollar on February 9, up from 18.67 pesos on February 2.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.79% from 8.52% on February 2.
The IPC Top Stock Gainers for the week were: GAPM (+3.81%), GRUPO MEXICO (+1.86%), and Q* (+1.73%) and the Biggest Losers were: TELEVISA (-10.22%), GRUMA (-7.52%), and PENOLES (-7.40%).
Corporate & Market News
Santander announced that it would acquire outstanding shares of its Mexican subsidiary and delist the company from the Mexican Stock Exchange (BMV), as well as the U.S. stock exchange. According to the bank, the move is aligned with its strategy to increase its market share in growing markets and reflects its confidence in Mexico and the country’s long-term growth potential.
Banks operating in Mexico reported profits of 236.743 billion pesos in 2022, a 30% y-o-y increase and the highest figure reported since the National Banking and Securities Commission (CNBV) began keeping records. 2022 was marked by a rise in interest rates as part of an effort to contain inflation, which also positively impacted financial institutions.
América Móvil announced it had entered into a definitive agreement with Österreichische Beteiligungs regarding their shares in Telekom Austria AG to allow América Móvil to take control of the group. As part of the 10-year agreement, the mobile tower business of Telekom Austria AG will be spun-off to allow for more efficient capital allocation and greater capacity for Telekom Austria to expand its investment plans.
Tesla continues to receive media coverage after President Andrés Manuel López Obrador said on Wednesday that Tesla was considering a new plant in either Nuevo Leon or Hidalgo to take advantage of the proximity to the Felipe Ángeles International Airport. The company has yet to issue a formal statement.
Unilever unveiled it would invest 400 million dollars in Mexico over the next three years and build a new manufacturing plant in Salinas Victoria, Nuevo León which will supply local and international markets. Mexico is one of the company’s top 10 markets and represents an important hub for the export of beauty and personal care products to over 25 other countries.
BMW will invest 800 million euros in San Luis Potosi to produce high-voltage batteries and the fully electric model “Neue Klasse.” 500 million euros will be designated for the company’s existing battery assembly center while the additional 300 million euros will be used to adapt and expand the body shop and build a new assembly line. The expansion is part of the company’s efforts to convert more than half its sales into all-electric cars by 2030.
Fourth Quarter results continued to roll in, mostly on the positive side. Rotoplas EBITDA rose by 8.5% helped by price increases. Arca’s EBITDA jumped by 9.4% also helped by price increases as volumes were flat.
Politics
Tensions between Supreme Court President Norma Piña and President Andrés Manuel López Obrador continue to rise after the Supreme Court President was the only person to remain seated during a ceremony to recognize the 106th anniversary of the constitution on Monday. Meanwhile, AMLO's daily press conferences have continued to lose popularity, according to a poll from El Financiero which estimates that 42% of people continue to have a favorable opinion of the daily press conference, down from 46% in October 2022.
As gubernatorial elections in the State of Mexico grow nearer, an opinion poll carried out by Covarrubias y Asociados indicates that Delfina Gómez from Morena has a solid 17-point lead over PRI member Alejandra del Moral. A Morena win in the state would be a big blow to the PRI which has governed the state for over 90 years.
Trade & Economics
The Bank of Mexico (Banxico) increased 2021 interest rates by a surprise 50 basis points on Thursday, raising the benchmark interest rate to a record 11%. This is the 14th consecutive time that the Central Bank has increased interest rates since June 2021. Likewise, the National Institute of Statistics and Geography revealed that inflation had reached an unexpected high of 7.91% from 7.82% in December. Banxico raised its forecast for 2023 inflation to 4.9%.
Mexico reported a trade surplus of 130.55 billion dollars with the United States, a 20.7% y-o-y increase and a new high. Mexico remained the United States’ second most important trading partner after Canada, with trade in goods and services between the two countries reaching 799.3 billion dollars, representing 14.7% of the United States’ total foreign trade. Overall, Mexico accounted for 15.7% of all U.S. imports.
Airport traffic increased across the board in January, compared to the previous year. The 12 airports of the Grupo Aeroportuario del Pacífico de Pasajeros registered a 30.0% increase in passenger traffic compared to the previous year. Similarly, Grupo Aeroportuario del Sureste announced that traffic in Mexico increased by 33.6% and Grupo Aeroportuario del Centro Norte reported a 35.3% increase in domestic passengers and 48.3% in international passengers. Volaris reported a 21.8% y-o-y and Viva Aerobus reported a 20.2% y-o-y increase in monthly passenger traffic.
News About Mexico in the Foreign Press
UK trade minister visits Mexico, targeting new deals
09/02/2023, Reuters, Alistair Smout
Biden weighs border deal that would deport non-Mexicans to Mexico
08/02/2023, The Washington Post, Nick Miroff / Maria Sacchetti and Kevin Sieff
Mexico expects US to finance 4 wind power plants
08/02/2023, AP, Staff
Former Mexican President Accused of Supporting Sinaloa Cartel
08/02/2023, The New York Times, Alan Feuer/ Maria Abi-Habib
Complaint takes aim at Mexican avocado production ahead of Super Bowl frenzy
07/02/2023, Reuters, Staff
Mexico opposes restart of U.S. 'Remain in Mexico' immigration policy
6/02/2023, Reuters, Kylie Madry
1st phase of Mexican solar project to be operating in April
03/02/2023, The Washington Post, Adam Sherman
Why Chinese Companies Are Investing Billions in Mexico
03/02/2023, The New York Times, Peter Goodman
Border-Town Warehouses Are Booming as More Manufacturing Moves to Mexico
7/02/2023, The Wall Street Journal, Peter Grant
Mexico Presidential Hopeful Ebrard Confident of Clinching Nomination
02/02/2023, Bloomberg, Alex Vasquez