MARKETS
The IPC index of Mexico’s top 35 stocks closed December 22 at 50,084.58 pesos, marginally up 1.5% from its December 15 close of 49,342.34. The 5.96% year-to-date decline in the IPC is still outperforming the S&P500 (-19.80% YTD).
The MXN/USD exchange rate closed at 19.56 pesos to the dollar December 22, from 19.76 pesos on December 15.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.82%, up from 8.78%, on December 15.
The IPC Top Stock Gainers for the week were: WALMEX* (+5.44%), MEGACPO (+4.41%), and ELEKTRA* (+3.41%), and the Biggest Losers were: VOLARA (-12.17%), ALSEA* (-6.95%), and TLEVICPO (-6.90%).
CORPORATE & MARKET NEWS
Bad news for Aeromexico, Vivaerobus and Volaris, perhaps good news for tourism. The President sent Congress proposed legislation that would allow international airlines to operate domestic flights in Mexico, or cabotage. It remains to be seen whether international airlines would be interested, and at what scale.
Latin American telecommunications giant América Móvil celebrated the issuance of its first sustainability bond on Mexico’s BMV Mexican Stock Exchange. Made in four tranches amounting to 24 billion pesos (US$1.22 billion), the issuance was also the largest sustainability bond issued on the BM. The company’s board has also approved a plan to convert its three different classes of shares into a single series in order to simplify its stock structure and attract potential investors. The shares created would be Series B and replace the existing Series A, AA and L. The new series would confer full voting rights.
Minera del Norte (Minosa), a subsidiary of steelmaker conglomerate AHMSA, is once again weighing a declaration of bankruptcy just over two years since its last attempt at doing so in June 2022. A judge rejected that petition despite liquidity problems caused when state-owned power company CFE forced Minosa to halt thermal coal sales – a key source of side revenue for the iron ore miner.
Fibra Inn said it has two investment groups looking to buy significant amounts of real estate trust certificates (CBFIs), enough to make the two groups the company’s most important investors. The first group, represented by the firms Origin Patrimonial and Factoring Azteca, seeks to purchase up to 30% of Fibra Inn’s shares, while the second group, formed by Comercial Hotelera Mexicana de Occidente, Hotel Financing Found and Ernesto Fernando Echavarría Salazar, seeks a stake of between 40% and 49% in the company. Fibra Inn has been notified of the potential sale "which would have a significant influence and would modify its capital structure," the trust wrote in the statement. The company clarified that if the purchase is made the company will remain public.
Walmart de México y Centroamérica appointed Ignacio Caride senior vice president of omnichannel operations, as part of several organizational moves following international changes.
US hotel chain Hilton will invest US$200 million in the construction of the Waldorf Astoria Hotel in San Miguel de Allende, Guanajuato, which is set to open in 2025. The Waldorf Astoria hotel will have 120 rooms and 24 residences and will be owned by the Peakair Group and managed by Hilton.
Arca Continental, one of the largest Coca-Cola bottlers in the world, has been recognized for its environmental, social and corporate governance (ESG) performance with its fourth consecutive confirmation in the Dow Jones Sustainability Index (DJSI) for the Latin American Integrated Market (MILA).
Mexico’s bank association (ABM) is breaking its decades-long tradition of holding its national convention in Acapulco, Guerrero state, to announce its next edition, the 86th, in Merida, Yucatan, on March 16 and 17, 2023.
Coca-Cola Femsa was ratified for the sixth consecutive year as a member of the DJSI MILA Pacific Alliance sample, which groups the 68 leading sustainability companies in Chile, Colombia, Mexico and Peru...Wyndham Hotels & Resorts opened its first hotel under the Grand brand in Mexico, in the tourist center of Cancun, Quintana Roo... Nissan Mexicana began production and assembly of its Versa model 2023 car at its Aguascalientes 1 manufacturing plant... Fibra Soma repurchased US$200 million of a bond it issued in 2021, which it covered with a syndicated loan led by BBVA Mexico. CADU announced the sale of a lot for 231 million pesos, which will strengthen its liquidity and financial structure. At Fibra Hotel, members of the Technical Committee and executives of the manager informed the company they acquired 4,572,636 CBFIs in the market.
Grupo Hotelero Santa Feb has signed an agreement for the sale to Barceló Hotel Group of the Hilton Guadalajara for US$59 million, which will be Hilton branded until January 31, 2023. The company also signed an agreement with the Mahekal Beach Resort for US$56 million, a hotel with 195 rooms, which includes 4 restaurants and bars in a 50% partnership with a group of Mexican investors. The hotel is in Playa del Carmen, one of the most important destinations in Mexico and internationally recognized for its connectivity to the European, North and South American markets.
In ratings updates, Finamex Casa de Bolsa received an upgrade in its long-term credit ratings to HR A+ from HR Ratings due to the growth in its capitalization. Value Casa de Bolsa received a rating ratification of 'HR A+' from HR Ratings, with a change in outlook from positive to stable. Moody’s altered its ratings outlook for Fibra Uno from stable to negative, while its overall long-term rating was maintained at 'Baa2'. Fibra Shop received an affirmation of its long-term local rating at 'A+(mex)' with a stable outlook from Fitch Ratings. Radio Centro received long- and short-term rating downgrades from HR Ratings to 'HR D', or default level, after the company obtained a six-month waiver for the repayment of three bonds totaling 109 million pesos. Grupo Rotoplas, the leading provider of water solutions in the Americas, announced it achieved a "B" rating in CDP's Climate Change report on a scale ranging from "D-"(disclosure) to "A"(leadership). Quálitas Controladora affirmed their Fitch Ratings of 'BBB' and 'AAA(mex)', with an IDR rating of 'BBB-', both with stable outlooks.
POLITICS
Tensions are high between the governments of Mexico and Peru, following Mexico’s decision to give asylum to the family of Peru's ousted president Pedro Castillo, whose wife and two children arrived by plane early Wednesday, December 21. Castillo himself, however, remains in custody of Peruvian authorities, arrested December 7 after attempting to dissolve illegally Congress earlier that day. Mexican President Andrés Manuel López Obrador confirmed Castillo called to ask for asylum but was arrested before he could arrive at Mexico’s embassy in Peru.
Peru responded to the granting of asylum to Castillo’s family by declaring Mexico’s ambassador to Lima Pablo Monroy persona non grata, giving the diplomat 72 hours to leave Peruvian territory. Monroy has indicated he is preparing to leave in compliance.
Mexico’s foreign ministry issued a statement late Tuesday lamenting his expulsion and confirming a subordinate would take over operations at the embassy. AMLO defended Castillo in press briefings Wednesday and Thursday and questioning the legitimacy of his successor Dina Boluarte, adding her installment represents a coup led by conservatives in Peru. AMLO, however, maintains that he does not wish to break off diplomatic relations.
AMLO said the Mexican government is weighing a US proposal that would facilitate low-interest loans to state-owned utility CFE aimed at efforts to build needed infrastructure for lithium development and double the country’s renewable energy generating capacity between 2023 and 2030. The president signaled openness to the proposal, telling reporters Tuesday, it could work only if the loans go to CFE and take advantage of the low interest rates the Biden administration in the US has been pushing worldwide to spur projects addressing climate change. He added the finance ministry (essentially the sovereign) would back any loans for CFE under the arrangement. The foreign ministry has estimated a needed investment of US$48 billion to achieve Mexico’s sustainability goals for 2030.
Foreign minister Marcelo Ebrard said he plans to unveil projects that may well take advantage of this lending arrangement at the upcoming “Three Amigos” summit of Canadian, US and Mexican presidents January 9-11. These projects would be tied to Mexico’s Plan Sonora to develop lithium deposits and use for rechargeable car batteries to feed planned electric vehicle assembly plants in development along the US-Mexico border, all powered by several solar generation plants in development.
Mexico's finance ministry has also announced it would make early payments on outstanding loans amounting to 896 million pesos to reduce the foreign debt burden for the next administration to start in 2024. The debt in question is largely held by multilateral organizations, the ministry added. The advance payment program will begin with the ministry paying off two loans from the Inter-American Development Bank (IDB) that were set to mature in 2025.
AMLO and Ebrard are also eyeing next month’s visit from US President Joe Biden for the next round of discussions over Mexico’s dispute over US exports of GMO yellow corn into Mexico. The dispute gained attention in October after AMLO said Mexico would outright ban the GMO corn’s import, an act the US says is a blatant violation of the USMCA trade agreement.
AMLO met with the CEO and head of LatAm operations for Ireland-based tech firm Aptiv on Monday, December 19, with the executives confirming the company’s commitment to invest and create jobs in Mexico. The execs noted the completion of three new plants in Mexico this year, adding the company created 13,500 jobs in Mexico from 2019 to 2022 at 40 facilities across the country. With 43 years in Mexico, the company has turned its focus to self-driving and electric vehicle technology, with Aptiv boasting some 78,700 workers in Mexico.
TRADE & ECONOMICS
Mexico’s inflation rose by 0.39% in the first half of December for an annual rate of 7.77% (versus 7.80% in November). Core inflation climbed by 0.57% for an annual rate of 8.35%, from the previous 8.52%. According to the latest Citibanamex survey, analysts from 30 financial institutions cut their forecast for end-2022 headline inflation to 8.01% from 8.30% in the previous biweekly survey, a fourth consecutive decline in the median consensus estimate. Forecasts for the headline rate at the end of December ranged from a low of 7.65% from Vector to a high of 8.35% from Thorne & Associates.
The Federal Consumer Protection Agency (Profeco) stated a total of 2,000 people were unable to enter the two concerts of Puerto Rican singer Bad Bunny at the Azteca stadium in Mexico City. Profeco found the agency did not oversell tickets to fans, rather the ticket-reading system crashed due to an unusually large amount of tickets being scanned. Ticketmaster has agreed to reimburse the tickets and provide up the 20% of the ticket price for inconveniences to customers.
Retail sales in Mexico increased 0.7% in October in real terms, the largest monthly increase since February of this year, when retail sales grew 1% monthly. In annual figures and not adjusted for seasonality, retail revenues grew 3.8% during the tenth month of this year, compared to the same period of 2021.
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NEWS ABOUT MEXICO IN THE FOREIGN PRESS
Mexico to Renew Anti-Inflation Pact with Firms in 2023
22/12/2022, Bloomberg, Max de Haldevang
Audi union in Mexico sets Jan. 1 strike deadline as workers eye higher pay
22/12/2022, Reuters, Staff
Mexico Inflation Quickens After Shopping Discounts End
22/12/2022, Bloomberg, Max de Haldevang
Pipeline blast kills at least one Pemex worker in central Mexico
21/12/2022, Reuters, Staff
U.S. allows Sempra to re-export LNG from Mexico
21/12/2022, Reuters, Timothy Gardner
Mexican journalists, cultural commentators demand president end provocations
21/12/2022, Reuters, David Alire Garcia
Mexico plans to ask US for up to $48B for solar projects
20/12/2022, The Washington Post, AP
Mexico arrests brother of leading drug cartel boss
20/12/2022, The Washington Post, AP
Biden heads to Mexico next month for leaders summit
20/12/2022, The Washington Post, AP
Mexico headline inflation seen rebounding in early December, core inflation to slow: Reuters poll
20/12/2022, Reuters, Staff
Pending Mexican central bank post to be decided soon, president says
20/12/2022, Reuters, Staff
Mexican president laments attack on journalist, then bashes media
19/12/2022, Reuters, Staff
France's Vinci to invest $820 mln in Mexico airport, governor says
19/12/2022, Reuters, Staff
Mexican president says in talks with Boeing to rent aircraft for military-run carrier
19/12/2022, Reuters, Staff
19/12/2022, Los Angeles Times, Kate Linthicum
Texas and Mexico cities strained before expected migrant surge
18/12/2022, Los Angeles Times, Giovanna Dell'Orto/ Morgan Lee/Acacia Coronado