MARKETS
The FTSE-BIVA index closed on March 30 at 1,123.89, up 2.47% from its March 23 close at 1,096.82. The +11.04% year-to-date increase in the FTSE-BIVA continues to compare favorably to S&P500’s +5.50% increase.
The MXN/USD exchange rate closed at 18.10 pesos to the dollar on March 30, from 18.58 pesos on March 23, but 0.1% below Wednesday’s close, ending an eight-day winning streak.
The Mexican 10-year bond (2031) closed on Thursday with the yield at 8.85% from 8.926% on March 23.
The FTSE-BIVA Top Stock Gainers for the week were: GRUPO TELEVISA (+12.01%), GRUPO CARSO (+8.89%) and ALSEA (+8.06%) and the Biggest Losers were: REGIONAL (-2.86%), BANORTE (-1.97%) and SITES (-0.94%).
CORPORATE & MARKET NEWS
BIVA announced the first IPO of the year, on behalf of the Mexican infrastructure and energy trust FIBRAeMx. FIBRAeMx operates four concessions throughout the country in the states of San Luis Potosí, Guerrero, and the State of Mexico. Through the IPO, the company collected approximately US$ 367 million.
GF Banorte and Alsea held their annual Investor Days in New York and painted a positive outlook for the year. Over five years GF Banorte expects its new FinTech Bineo to reach 2 to 3 million clients, ROE of 25%-30% and achieve an impressive efficiency ratio of 23%-25%. For its Rappi JV in credit cards, Banorte expects 3.5 to 5 million customers, and ROE of 25%-30%. By contrast GF Banorte unveiled a consolidated five-year guidance of ROE 19.5%-21.5%, and efficiency ratio of 34%-36%, and currently has 11.5 million clients (ex its afore). For 2023 Alsea expects revenue growth of 13%, pre IFRS EBITDA margin above 13% above 2022 12.9%, and capex of 5.5 billion pesos, up from 2022’s 4.2 billion pesos.
Canadian energy company ATCO has agreed to transfer the ownership to the Mexican government an unfinished pipeline, ending a dispute that began in 2018 when the Mexican Federal Energy Commission (CFE) canceled a contract with the company after ATCO determined it could not complete the final stretch of the project due to opposition from local communities.
The fight between TV Azteca and its bondholders continues. The company said during a hearing in Manhattan that bondholders could not force it to declare bankruptcy in the United States because it does not have operations or substantial assets in that country. The judge has yet to make an official ruling. Separately, after a month-long delay, TV Azteca reported their 4Q22 earnings, which fell 50% compared to the same period of 2021, reporting profits of $125 million.
On a similar note, Aeromexico said it was considering going public again during the second half of 2023 or 2024, having previously been listed on the BMV. The airline’s CEO Andrés Conesa said that it was eyeing US markets, either the NYSE or NASDAQ. The company was delisted from the Mexican stock exchange in December 2022 after undergoing a restructuring.
S&P upgraded BIMBO’s global debt rating from 'BBB' to 'BBB+' and its national rating from 'mxAA+' to 'mxAAA', with a stable outlook. Meanwhile, a group of delivery workers has submitted a claim against BIMBO USA for alleged additional hours. They argue they were incorrectly classified as independent contractors and not as employees. BIMBO responded with a counterclaim, which was dismissed after the US Department of Labor intervened.
Grupo Aeroportuario del Pacífico issued 5.4 billion pesos in stock certificates on the Mexican market. Meanwhile, Grupo Aeroportuario del Centro Norte announced their General Shareholders’ Meeting on April 21, 2023.
POLITICS
The death of 29 migrants at a migrant detention center in Juarez is being investigated by the country’s attorney general after a video was circulated showing authorities detaining fleeing migrants despite the increasingly intense fire. Mexican cabinet-level officials have been quick to blame each other with the Secretary of Government Adán Augusto López blaming Foreign Affairs Minister Marcelo Ebrard who coyly responded that politics should be left out of this.
Edumundo Jacobo, the executive secretary of Mexico’s National Electoral Institute (INE), resigned two weeks after being reinstated, saying that there are inadequate conditions to continue is the position after the body’s president Lorenzo Córdova’s term ends on April 3. Meanwhile, Minister Javier Laynez Potisek admitted a constitutional controversy over the reform to the country’s electoral law which stripped the INE of a significant portion of its budget, suspending the reform. This could be the beginning of a lengthy battle between the Supreme Court and the Executive Branch.
TRADE & ECONOMICS
The Bank of Mexico hiked interest rates by 25 bps to 11.25% in a unanimous vote, after two 50-bp increases in the past meetings in what is expected to be the last rate increase for the year. The Central Bank also cut the inflation forecast for the next few quarters and continues to expect inflation to slow to 3.1% in 2024.
Mexico’s exports declined in February for the first time since late 2021, leading to a trade deficit of US$ 1.8 billion. Exports declined by 2.8% YOY to US$ 44.9 billion, driven by a 19% decline in oil exports, while imports rose by 4.1% YOY to US$ 46.8 billion. Non-oil exports also declined amid concerns the strong Mexican Peso may be having an impact on competitiveness.
Yesterday, President López Obrador sent to the Chamber of Deputies a bill to modify the country’s mining law. While the bill will not be retroactive, it could damage the country’s future as one of the leading countries in the mining industry – Mexico is currently the largest producer of silver in the world. Among other measures, the bill would reduce the duration of concession titles from a maximum of 100 years to 30 years, limit concessions to specific minerals rather than all identified minerals in the specified area and call for tenders to be awarded via public bids.
The government also sent a bill to Congress to facilitate canceling concessions in infrastructure, and transport and limiting international arbitration claims.
Almost 8% of the remittances from the United Sates are associated with illicit activities according to a new study published by Signos Vitales, which analyzes public data in Mexico. The NGO noted that some Mexican municipalities received more transfers per month than the number of homes and that the funds’ origins were unknown.
Mexico is expecting to receive record-breaking amounts of foreign currency from tourism this year, according to the Secretary of Tourism Miguel Torruco who estimated that Mexico would receive US$ 31.169 million in foreign currency from tourism alone, a 26.8% increase over 2019 figures.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Exclusive: Canada's ATCO gives Mexico troubled pipeline after damage award -sources
30/03/2023, Reuters, Dave Graham
Chevron, Exxon are big buyers in US Gulf of Mexico drilling auction
29/03/2023, Reuters, Nichola Groom
Mexico's Banorte to add 800 jobs to tap into nearshoring
29/03/2023, Reuters, Staff
Mexican president proposes tougher mining laws, shorter concessions
29/03/2023, Reuters, Staff
Mexico Government Says Agents to Blame for 39 Migrant Deaths
29/03/2023, Bloomberg, Maya Averbuch and Jose Orozco
At least 40 people dead in fire at Mexico migration detention centre
28/03/2023, Financial Times, Christine Murray
U.S. Border Policies Have Created a Volatile Logjam in Mexico
28/03/2023, The New York Times, Miriam Jordan/ Edgar Sandoval
Cemex, Vulcan Reach Temporary Deal on Port That Drew US Ire
28/03/2023, Bloomberg, Andrea Navarro
Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs
27/03/2023, Reuters, Jarrett Renshaw y David Lawder
Fast Slide of ‘Super Peso’ Highlights Test for Emerging Markets
27/03/2023, Bloomberg, Michael O'Boyle/ Maya Averbuch
Mexico sanctioned for not protecting endangered porpoise
25/03/2023, The Washington Post, Associated Press