MARKETS
The IPC (top 35 Mexican stocks) closed December 8 at $51,051.96 pesos, down -0.79% from its December 2 close of 51,517.35. The 4.14% year-to-date decline in the IPC is still outperforming the S&P500 (-16.84% YTD).
The MXN/USD exchange rate closed at 19.64 pesos to the dollar December 8, down from 19.15 pesos on December 2.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.93%, down from 8.99%, on December 2.
The IPC Top Stock Gainers for the week were: LABB (+9.15%), GRUMAB (+6.15%), and LIVEPOLC (+4.97%), and the Biggest Losers were: TLEVICPO (-4.91%), SITES1 (-4.68%), and CEMEXCPO (-4.59%).
CORPORATE & MARKET NEWS
Orbia Advance Corporation successfully raised 10 billion pesos via issuance of two bonds. The first drew 2.34 billion pesos under the designation ORBIA 22L, maturing in three years and with a coupon of 0.40 percentage points above the TIIE interbank interest rate, coming to 10.72% for the first period. The ORBIA 22-2L bond issuance generated 7.66 billion pesos for the firm, with the paper maturing in November 2032 at a fixed rate of 10.63%.
BACHOCO agreed to buy all of Norson Holding, a pork producer from Sonora, Mexico.
Fintech Advisory closed the sale of 29.99% of its OMA shares to VINCI for US$1.17 billion, including debt.
Santander Mexico plans to double its size in 5-6 years through organic growth, after dropping out of the bid to buy Citibanamex’s consumer assets.
The eventual buyer of Citibanamex's consumer and business banking assets in Mexico will be announced in the first quarter of 2023, said Manuel Romo, CEO of Citigroup's Mexican subsidiary. The two most talked-about candidates to acquire the assets to be sold from Banamex are Banco Mifel and businessman Germán Larrea of mining conglomerate Grupo México.
In November VivaAerobus' capacity and demand climbed by an impressive 101% and 96% vs. 2019, with a load factor decrease of 2.2 pp. to 85.9%. VOLARIS’s capacity and demand increased by 18.8 and 19.5% versus November 2021, with a contraction of 0.6 pp. in the load factor to 88%. Meanwhile VOLARIS held an Investor Day in NYC, outlining its strong growth outlook going forward. Aeromexico's demand and capacity rose by 6.8% and 7.2% YOY vs. 2019, respectively.
Rotoplas held its annual Investor Day, reiterating its strong sustainable growth outlook. The company increased its EBITDA CAGR outlook to 2025 from 16-18% to 25-27%.
Mexico’s listed airports reported strong traffic growth for November. GAP’s traffic was 22.4% above 2019 levels and up 22.3% YOY. ASUR’s passenger traffic rose by 25.2% YOY vs. 2019 and by 16.8% YOY.
Long-time Mexican retailer Grupo Famsa, whose banking unit collapsed with the pandemic and forced the parent into bankruptcy February 2022,, said it had failed to make its payments on its principal and interest with a syndicated loan it secured in May, due to its compromised liquidity situation.
Grupo Hotelero Santa Fe, one of Mexico's leading hotel operators, is allowing its franchise agreement for the Hilton Guadalajara complex to expire on January 31 after 25 years in operation.
Grupo Sanborns announced that its board of directors approved delisting from the Mexican stock exchange (BMV), as its parent company, the industrial conglomerate Grupo Carso run by billionaire Carlos Slim, takes full ownership.
Nubank, LatAm’s largest digital financial services platform, announced an equity capitalization in its Mexican arm of US$330 million, which will be invested to finance the expansion of the company’s portfolio, increase penetration across market segments and strengthen its operations and long-term commitment in Mexico.
Heineken México confirmed its participation in the Rain Nests initiative, a sustainability program operating in Jalisco state. In alliance with the government of Jalisco and as part of its transversal sustainability strategy "Providing a Better World", the company will help with the installation of the innovative rainwater collection system at the "El Salto" Health Center, which will benefit 1,200 people every month.
POLITICS
Mexican President Andrés Manuel López Obrador’s (AMLO) Plan B electoral reform package reached the Senate, where the party’s leader in the Senate, Ricardo Monreal said it would first head to committees for discussion and not be fast tracked. The reform seeks to amend six secondary laws on electoral matters, including changes to the organizational structure of the National Electoral Institute (INE) like pay cuts to board members and the elimination of two trust funds tied to the electoral authority. It also mandates the dismissal of the current executive secretary, Edmundo Jacobo Molina, and removes powers to sanction public servants.
Lower house lawmakers with the Movimiento Ciudadano (MC) party have already filed an injunction against AMLO’s so-called “Plan B” electoral reform, claiming there have been violations to the legislative process. MC lower house Jorge Álvarez Máynez, who leads the bloc of MC legislators in the Chamber of Deputies, said that the Morena party violated the legislative process by not publishing the opinion of the amendments to the secondary laws on electoral matters in the Parliamentary Gazette before they were approved In a floor vote.
AMLO revealed details on the recent removal by Peru’s Congress of then-President Pedro Castillo, confirming the former leader had contacted the office of the President in Mexico to confirm his plans to move to Mexico’s embassy in Peru to request political asylum. However, said López Obrador in comments to media, Castillo was arrested by Peruvian police before he could do so, adding his telephone was likely tapped.
The president tapped Rafael Marín Mollinedo to take over at Mexico's customs agency ANAM, replacing Horacio Duarte Olivares as director. Interior minister Adán Augusto López has already sworn in Marín at the post, though his appointment must still be ratified by Congress.
Forced by the Supreme Court to name an appointee to fill one of three vacancies on the seven-person competition commission (Cofece), this one left open since March 1, 2022, AMLO proposed attorney Andrea Marván Saltiel to be commissioner of Cofece for a nine-year term. With roughly a decade working within Cofece, Marván most recently served as executive chief of staff since 2019, where she was responsible for organizing investigations into anti-competitive practices.
The Senate is sending back the first bill to increase the number of vacation days for formal Mexican employees to the lower house, rejecting a provision that would have workers get six continuous days of vacation and six others in coordination with the employer, rather than the 12 continuous days in an earlier version of the legislation, before the lower house modified it. Senate majority party leader Ricardo Monreal, who heads the upper house committee on political affairs, said, "We voted, and we are going to ratify it as we approved it 20 days ago in the Senate," he said in a press conference.
AMLO looks to make new changes to the airline industry, announcing the planned launch of a new domestic airline operated by the military (Sedena) to start flights by end-2023. The president also raised the possibility of allowing so-called Cabotage flights in Mexico, where international airlines are allowed to make domestic connections, a provision potentially advantageous to foreign airlines but rarely allowed by governments, who seek to ensure domestic carriers alone operate routes contained within national borders. Mexico’s domestic airline chamber (Conaero) has rejected this proposal and asked AMLO to end any further discussion on the matter.
TRADE & ECONOMICS
Mexico and Canada prevailed over the U.S. under the USMCA regarding content rules for cars moved borders, boosting competitiveness of their car industry.
INEGI reported November headline inflation increasing 0.58% month-on-month, well below consensus estimates, resulting in annual headline dropping to 7.80% from 8.41% in October, a welcome downward surprise. Core inflation, however, continued to rise, reaching 8.51% from 8.42% a month earlier. The index was hit by the end to annual electricity subsidies, pushing up prices 20.3% MoM, but helped by unexpected improvement in basic food and produce. Producer prices, meanwhile, fell for a fourth consecutive month, a very positive sign with the annual index drawing down to 5.68% in November.
Mexico's labor market showed continued improvement in November, though showing slower improvement than has been registered in the three preceding months.. Private sector companies in Mexico hired 101,275 new workers in November, a monthly increase of 0.5%, according to data collected by the Mexican Social Security Institute. With this, the country reached a new high of 21,718,601 formal registered jobs.
Mexico’s consumer confidence index increased by 0.7 points in November, according to INEGI and Banxico data, thanks to improved perceptions about the future of the national economy and an improving outlook for purchasing of durable goods, this following a mixed start to 4Q22.
Banxico warned of inflationary pressure emerging from the planned 20% increase in Mexico’s minimum wage in 2023, and potential impacts it could have on higher paid workers. The bank said the move could delay pay hikes for higher level employees and represent higher pay to the labor sector with no tangible improvement in productivity.
Private consumption in Mexico increased 0.4% in September compared to August, in seasonally adjusted figures, according to the INEGI. This marks the third consecutive monthly increase, but the second lowest growth month of the year so far.
Gross fixed investment in Mexico decreased 0.9% in September, in seasonally adjusted figures, based on data from INEGI. The drop in fixed investment, which is an indicator that serves to anticipate future production based on expenditures made in construction, machinery and equipment for new projects, was the largest in the last seven months.
Auto production in Mexico grew 8% in November compared to the same month in 2021, according to the INEGI. Vehicle exports decreased 3.8% compared to the same month in 2021. In the first 11 months of the year, domestic car production increased 9.6% compared to the same period in 2021, while exports grew 5.8%.
Cofece determined that there are barriers to competition in the health insurance market in Mexico. The agency said that after conducting the study it identified high costs for changing insurance companies, lack of information on services contracted and insurance agency salaries schemes are problems in the industry.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Mexico annual inflation slows to 7.8% in November, core index still a concern
08/12/2022, Reuters, Staff
Mexico to present clean energy projects at North American Leaders' Summit, foreign minister says
08/12/2022, Reuters, Staff
Banxico’s Esquivel Has Fair Chance of Keeping His Central Bank Seat
07/12/2022, Bloomberg, Max de Haldevang
Mexico’s AMLO to Host Biden, Trudeau for Summit in January
07/12/2022, Bloomberg, Josh Wingrove, Jennifer Jacobs, and Eric Martin
Mexico peso seen resilient through economic slowdown in 2023: Reuters poll
07/12/2022, Reuters, Gabriel Burin
Pace of Mexico rate hikes could start to slow, cenbanker says
06/12/2022, Reuters, Valentine Hilaire/ Anthony Esposito
Volaris sees Mexico regaining aviation rating by end of next year
06/12/2022, Reuters, Staff
Mexico’s Congress Defeats President’s Bill to Overhaul Election Agency
06/12/2022, The Wall Street Journal, Juan Montes
Mexico's inflation seen slowing pace in November, ahead of cbank decision
05/12/2022, Reuters, Staff
MercadoLibre Files Complaint Against Apple in Brazil, Mexico
05/12/2022, Bloomberg, Carolina Millan
Mexican judge killed in state of Zacatecas
04/12/2022, Reuters, Staff
Venezuela opposition demand date to resume dialogue with Maduro in Mexico
04/12/2022, Reuters, Staff
Mexico to hike minimum wage by 20% in 2023, raising inflation worries
02/12/2022, Reuters, Staff