MARKETS
The IPC index of Mexico’s top 35 stocks closed January 19 at 53,383 pesos, down -0.39% from its January 12 close of 53,594. The impressive 10.15% year-to-date increase in the IPC YTD compares to S&P500’s more modest 1.55%.
The MXN/USD exchange rate closed at 18.99 pesos to the dollar January 19, from 18.84 pesos on January 12.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.56%, up from 8.48%, on January 12.
The IPC Top Stock Gainers for the week were: TLEVICPO (+6.09%), VOLARA (+4.64%), and ASURB (+4.24%), and the Biggest Losers were: GMEXICOB (-8.09%), SITES1 (-7.23%), and GCC* (-5.39%).
CORPORATE & MARKET NEWS
BBVA Mexico announced the launch of two products designed to gain mortgage share in the country. The Mexican subsidiary of the Spanish bank said that the product "Muda tu hipoteca + Tu casa te presta" seek to help customers refinance debt and reduce monthly payments by moving a person’s mortgage. Its customers will also be able to obtain an additional line of credit for free use at a lower interest rate than a personal loan.
Walmart de México y Centroamérica is seeking an injunction against the reforms to the General Law for Tobacco Control, which prohibits the display of cigarettes. The retail giant filed the lawsuit on January 16; however, it has five days to resolve inconsistencies found by the district court in Mexico City to determine whether to admit it for processing.
Banorte reported another set of good results, with recurring net income of 11.6 billion pesos (up 28% YoY), and ROE of 19.4%. Net interest income growth of 18% drove the good results, explained by higher interest rates. The bank published guidance for 2023 of income of 50.5 billion to 52.5 billion in line with market expectations.
AXTEL launched a tender offer for as much as US$75 million of its 6.4% 2024 bonds (US$423 million remaining) at 86c on the USD1. This follows recent tenders by GF Mega and by Fibra SOMA.
GAP forecasts 2023 passenger traffic to increase by 7% YOY, aeronautical and non-aeronautical revenue to grow by ~13% and ~14% YOY, respectively, and EBITDA to expand by 11%.
Chedraui estimates same-store sales could grow by over 7-8% in Mexico and 5% in USD terms in the United States, and the EBITDA margin growing by 15-20 bps. to 7.5%
OXXO opened Andatti Drive (drive-thru coffee shop) in Nuevo Leon, perhaps planning to compete with Starbucks.
Tangerine Pomelo Group or Tangelo, the non-bank financial company formerly known as Mexarrend, will take a series of measures intended to manage its financial situation and maintain the businesses’ liquidity, including suspending debt and interest payments.
BioElements, a Chilean startup specializing in the production of biodegradable containers and packaging, announced that its subsidiary in Mexico raised $30 million dollars in an investment round led by the Brazilian bank BTG Pactual. The company said its subsidiary in Mexico was the first packaging company to obtain this amount of financing in the country, although it did not provide details on its plans for these resources.
Volaris, Mexico's leading low-cost airline, announced the relaunch of its v.business benefits program, aimed at boosting business travel and benefiting small and medium-sized companies.
Fibra Prologis, a real estate investment trust and logistics real estate management company in Mexico, expects to close 2023 with a property occupancy rate between 97% and 98%, driven by nearshoring. The company also declared a dividend payment of $572.2 million pesos, $0.5599 pesos per share.
ABB, a European company specialized in robotics and electrification, announced the opening of its Mexico Technology and Engineering Center (MXTEC), located in Mérida, Yucatán, which required an initial investment of $1 million dollars.
POLITICS
Mexican President Andrés Manuel López Obrador (AMLO) met with representatives of four Canadian firms Wednesday, following up on a request to do so last week from visiting Prime Minister Justin Trudeau. Mexico has locked horns with multiple mining and energy firms in recent years, with private Canadian electric power firms bucking at the administration’s attempts to prop up state-owned energy firms at the cost of competition, cracking down on self-supply contracts that allowed some miners to offset carbon emissions by going 100% clean energy, and in some cases squeezing miners on tax bills while turning up the regulatory heat to threaten concessions.
Reuters cited an official close to the matter as saying the four firms were pension fund La Caisse de depot et placement du Quebec (CDPQ), ATCO Ltd, Northland Power Inc, and Canadian Solar Inc. The news wire added that a CDPQ official later confirmed the firm’s presence at the meeting Wednesday night. AMLO, in Thursday’s press conference, said they resolved all four problems “without a hitch”; however, the CDPQ source speaking to Reuters was skeptical any problem had been resolved, describing the meetings as preliminary that had gone well.
The last week saw three key appointments in Mexico, including AMLO’s naming Monday of former National Guard Commander Luis Rodríguez Bucio to head the public security ministry, following the resignation of Ricardo Mejía Berdeja three days earlier. Mejía broke with the Morena Party to run under the Labor Party flag for the governorship of Coahuila state.
Lawmakers ratified the appointment of Omar Mejía Castelazo to replace Gerardo Esquivel as a deputy governor at Mexico’s central bank (Banxico). The new member on the monetary policy board testified to his support of central bank autonomy and vowed to fight inflation. Concerns the new board member might be dovish are alleviated by the fact that he replaces Esquivel, long considered the biggest dove on the board. Mejía will serve for eight years until December 31, 2030.
Legislators also confirmed Leopoldo Melchi García to continue as head of Mexico’s energy sector regulator (CRE) for a second term going to December 31, 2029.
Fallout from the plagiarism scandal hitting Mexico’s Supreme Court continues. Mexico’s flagship university (UNAM) terminated the contract of a professor who acted as law school thesis advisor to now Supreme Court justice Yasmín Esquivel. Days earlier, UNAM’s law school FES Aragon announced Esquivel’s thesis had plagiarized another thesis. Critics are calling for the school to revoke the justice’s law degree. However, she continues to enjoy continued support from AMLO, who has cast blame on others at UNAM including the school’s dean.
One of the world’s strictest tobacco-control laws went into effect in Mexico over the weekend, winning strong praise from NGOs and the World Health Organization. The rules ban smoking in parks, places of work and open-air terraces at restaurants. It also forces vendors to keep product out of sight of children and all but eliminates advertising, among other restrictions. With fines up to 3,000 pesos, critics are concerned the new law will become a focus of abuse with police bribery still common in Mexico.
TRADE & ECONOMICS
As an anti-inflation measure, the Mexican government imposed a 50% tariff on exports of white flour corn, the most widely used variety for products like tortillas. According to the Mexican Institute for Competitiveness (Imco), the tariff represents a risk to competitiveness and will not help stabilize the price of this product.
Vanguard Group, the world's second largest fund manager, expects Mexico's economy to grow 1.5% in 2023. Vanguard's analysts' forecast is above the consensus of most financial analysts and brokers. "Our optimistic forecast is based on our view that the consensus will have to postpone its U.S. recession warnings as first quarter U.S. data comes in, leading to upward revisions to Mexico's GDP outlook as growth proves resilient," said Vanguard analysts in a report.
Mexican trade, services and tourism chamber (Concanaco Servytur) announced the launch of the digital platform "Soy Empresaria" (I am an Entrepreneur), which aims to strengthen the professional and personal growth of women. Through the "Soy Empresaria" community, women will be listed in Concanaco's business directory, as well as interact with the business community and attend conferences, workshops and other events.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Mexico’s AMLO Met With Canada Pension Giant Amid Energy Feud
19/1/2023, Bloomberg, Mathieu Dion and Maya Averbuch
Mexican president defends bid to move cargo from longstanding hub to new airport
19/1/2023, Reuters, Kylie Madry
US hands over to Mexico suspect in missing students case
19/1/2023, The Washington Post, AP
First migrants cross into U.S. from Mexico using mobile app
19/01/2023, Reuters, Lizbeth Diaz and Jose Luis Gonzalez
Ancient Maya cities, 'super highways' revealed in latest survey
19/01/2023, Reuters, Staff
Mexico’s AMLO Meets With Canada Pension Giant Amid Energy Feud
18/01/2023, The Washington Post, Mathieu Dion
Mexico Bans California Climate Startup’s Experiments to Cool Atmosphere
18/01/2023, The Wall Street Journal, Kevin Niiler
Exclusive: Mexico's Pemex destroyed resources worth $342 million from two top fields
18/01/2023, Reuters, Stefanie Eschenbacher
Workers at embattled Mexican airline Aeromar hold off on strike, unions say
17/01/2023, Reuters, Kylie Madry
Mexican economy grew around 3% last year, fueled by tourism
17/01/2023, Reuters, Staff
10 dismembered bodies found buried in central Mexico
17/01/2023, The Washington Post, Associated Press
Mexico Seeks to Tame Tortilla Prices by Putting 50% Tariff on White Corn Exports
17/01/2023, Bloomberg, Juan Pablo Spinetto/ Maya Averbuch
US drug trial opens for Mexico ex-security head
16/01/2023, Washington Post, Mark Stevenson
Mexico’s Turn to Autocracy Should Worry the U.S.
14/01/2023, The Wall Street Journal, Denise Dresser
Senior Mexican official quits to run against ruling party in state election
13/01/2023, Reuters, Staff
BMW planning major investment in Mexico, minister says
13/01/2023, Reuters, Staff