MARKETS
The IPC index of Mexico’s top 35 stocks closed February 16 at 54,035.97, up 2.34% from its February 9 close of 52,801.43 The 11.46% year-to-date increase in the IPC compares favorably to S&P500’s 6.53% increase.
The MXN/USD exchange rate closed at 18.52 pesos to the dollar on February 16, up from 18.77 pesos on February 9.
The Mexican 10-year bond (2031) closed Thursday with the yield at 9.04% from 8.79% on February 9.
The IPC Top Stock Gainers for the week were: FEMSA (+13.98%), BANORTE (+6.91%) and Q* (+5.69%) and the Biggest Losers were: MEGACPO (-5.67%), PENOLES (-5.04%) and LABB (-4.89%).
CORPORATE & MARKET NEWS
Investors welcomed the details of Femsa’s long-awaited strategic review. Henceforth Femsa will focus on 1) Retail - Proximity, Health, Gas 2) Coca-Cola Femsa and 3) Digital. The entire Heineken stake will be sold, and other non-core positions will also be sold, or "strategic alternatives" found. The timeframe is 24-36 months but on Thursday, Femsa priced a €3.2bn offering in Heineken shares + €500mn in a convertible bond (half its stake) underlying its commitment to swift execution. Excess capital will be returned to shareholders.
On a related note, Oxxo opened its first entirely digital store without cashiers in Monterrey on the TEC de Monterrey campus. Consumers will use a QR code to enter the store and will be charged automatically for the products they select, thanks to an innovative use of artificial intelligence and security cameras which identify each product selected by the consumer. According to a press release from FEMSA, it is the first store of its kind in Latin America.
Source: Expansión
Citi has until the end of March to determine the terms of the sale of Banamex to Grupo México, specifically which parts of the business would remain with Citi. However, should the agreement fall through, a competing offer from Grupo Mifel reportedly still stands. During the weekend, Banamex executives met with representatives of the National Banking and Securities Commission and the Secretary of Finance and Public Credit to discuss the bank’s operations.
BIVA launched its own ESG platform to consolidate information related to ESG methodology, regulation, and labels. According to BIVA CEO María Ariza, the platform will continue raising awareness about the importance of adopting ESG criteria and provide companies with tools to raise funds.
Aeromar announced that it would end operations after 35 years. According to a company statement, the decision was made due to a series of financial problems and difficulties in reaching agreements that would allow it to continue operating in the long term. The announcement comes after the International Airport of Mexico City had given the airline an ultimatum to pay an outstanding debt of 522 million pesos or the airport would suspend the airline’s operations.
Credit Suisse will close its brokerage house and its derivatives portfolio to focus on its wealth management business. The bank said in a statement that it will maintain its strategic alliance with Actinver and continue to have a strong, refocused local presence.
More fourth-quarter results rolled in. Of note, Cemex reported a surprise fourth-quarter loss due to one-off charges for impairment of goodwill and fixed assets. América Móvil reported a 90% y-o-y decline in net profits due to the deconsolidation of its Chilean subsidiary Claro Chile and currency headwinds. Cuervo reported a 7.7% boost in EBITDA, driven by higher pricing. OMA reported a 26% increase in EBITDA, boosted by traffic recovery in its main airports. Alfa missed consensus due to a difficult quarter at Alpek and Sigma Europe. Vesta, Mexico’s purest nearshoring play, reported a 16% increase in EBITDA. Walmex reported great but expected results – Same Store Sales up by 10% - and boosted its dividend for a yield of 3.8%.
POLITICS
The U.S. trial of Genaro García Luna, Secretary of Public Security during the Calderon administration, continued to grab headlines. While the administration of former President Calderon has been the most tarnished by the allegations that have emerged in the trial, President López Obrador said on Thursday that he was considering denouncing García Luna’s lawyer for moral damages. During the cross-examination of Jesús Reynaldo Zambada, it was suggested that the Sinaloa Cartel had bribed AMLO’s administration when he was mayor of Mexico City, without providing any evidence.
TRADE & ECONOMICS
Investors expect that Mexico’s GDP will grow by 1% to 2% this year according to Bank of Americas Securities. 38% of analysts polled agreed that the biggest risk for the Latin American markets was internal politics, followed by rising interest rates in the United States. On a positive note, analysts believed that interest rates had reached their peak and would remain at 11% for the rest of the year.
Despite the rise in inflation, according to BBVA, consumption increased by 3.8% in January, its best performance in nine months, in large part due to an increase in real salaries.
The Mexican government issued a new decree eliminating the January 2024 ban on genetically modified corn for animal feed and industrial use in the country, although the country will still prohibit the use of GM corn for human consumption and ban glyphosate imports. On February 9, the U.S. government called upon the Mexican government to provide scientific evidence justifying the proposed bans. 18% to 20% of Mexican corn imports come from the United States.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Mexico Industrial Park Occupancy Hits Record on Nearshoring Boom
15/02/2023, Bloomberg, Carolina Gonzalez
Mexico claims largest synthetic drug lab bust to date
15/02/2023, The Washington Post, Associated Press
Mexico finds yet more corruption in health regulatory agency
15/02/2023, The Washington Post, Associated Press
Mexico, U.S. officials call for action after investigation into counterfeit medicine
15/02/2023, Los Angeles Times, Connor Sheets/ Keri Blakinger
Mexico's top diplomat says met with Tesla brass, 'good news' imminent
14/02/2023, Reuters, Staff
US Ag Chief Vilsack ‘Disappointed’ in Mexico GMO Corn Decree
14/02/2023, Bloomberg, Eric Martin/ Mike Dorning
Mexico seeks to curb 'abuse' of asylum system by migrants who do not plan to stay
13/02/2023, Reuters, Daina Beth Solomon and Lizbeth Diaz
Cuban president to get Mexico's highest medal for foreigners
12/02/2023, The Washington Post, Associated Press
Corruption Trial of Mexican Ex-Lawman Ripples Beyond Courtroom
11/02/2023, The New York Times, Alan Feuer/ Maria Abi-Habib
U.S. State Department warns to avoid parts of Mexico over ongoing violence, kidnappings
10/02/2023, The Washington Post, Nathan Solis