MARKETS
The IPC index of Mexico’s top 35 stocks closed January 5 at 50,790 pesos, up 2.57% from its December 29 close of 49,518. The -4.31% 2022-year decline in the IPC outperformed the S&P500 in 2022 (-18.99%). The index also closed 2022 with the fourth quarter of 2022 up 8.6%, marking its best quarterly performance since 2020 when it rebounded off two of the toughest quarters in the wake of the covid-19 pandemic.
The MXN/USD exchange rate closed at 19.34 pesos to the dollar January 6, up from 19.47 pesos on December 29.
The Mexican 10-year bond (2031) closed Thursday with the yield at 8.78%, from 9.00%, on December 29.
The IPC Top Stock Gainers for the week were: SITES1 (+16.29%), PE&OLES* (+10.67%), and GMEXICOB (+7.91%), and the Biggest Losers were: KOFUBL (-3.79%), CUERVO* (-2.57%), and GRUMAB (-1.23%).
CORPORATE & MARKET NEWS
Unifin Financiera confirmed it has signed confidentiality agreements with its bondholders as the major non-banking financial institution works to restructure its debt within the ongoing bankruptcy process.
Iron miner Minosa (Minera del Norte), a subsidiary of Mexico’s largest steel-maker Altos Hornos de México, has begun bankruptcy proceedings and halted payments to third parties after securing a court declaration of special protections by a judge January 2, more than two years after the firm’s first, failed attempt to declare bankruptcy.
Octavio Romero, CEO of Mexico’s national oil company Petróleos Mexicanos (Pemex), said the company is seeking assistance from the finance ministry to make its debt payments in 1Q23, which amount to between US$5.5 billion and US$6 billion. With total debt estimated at US$104 billion in December, Pemex is the world’s most indebted oil major. The ministry under AMLO has repeatedly stated its extraordinary commitment to support Pemex, a factor ratings agencies have heavily weighted in recent years. But that support was reduced in 2022 with Pemex asked to pay more of its own debt in light of the war in Ukraine sending global oil prices soaring and the treasury’s efforts more focused on stabilizing domestic energy prices.
In December 2022, GAP's passenger traffic increased by 18% YoY; ASUR’s Mexico traffic by 18.1% YOY and OMA's by 20.6% YoY. VOLARIS's capacity rose by 18.5% YoY and demand by 16.9% as load factor thus decreased by 1.2 pp.
Fibra Storage settled the first contingent payment of 33 million pesos from the acquisition of 5 Guardabox branches. This was 9 million in certificates (520,879 representing 0.2% of the total outstanding) and the remainder in cash. So far, the Fibra has disbursed 146 million and has only one last contingent payment to make, which will depend on Guardabox's final results in 2022.
Grupo Axo, Mexican distributor of international clothing lines, co-led an investment round with Vopero, a Uruguayan second-hand clothing that has moved into Mexico, as the firms target other Latin American markets.
U.S. automaker General Motors announced plans for its plant located in Ramos Arizpe, Coahuila, to produce only electric vehicles starting in 2024.
Fibra Macquarie announced that it aims to achieve zero net greenhouse gas emissions by 2040, with a priority on emissions from the real economy.
POLITICS
Mexico’s Supreme Court has elected Norma Lucía Piña Hernández as its new Chief Justice for a four-year term. Justice Yasmin Esquivel, favored by the President, was knocked out after reports emerged that she had plagiarized her undergraduate thesis, in a blow to AMLO. Piña Hernández is the first woman to lead Mexico’s top court. A progressive and outspoken advocate for women’s and LGBT+ rights, the new Chief has also proven herself a counterweight to López Obrador administration attempts to concentrate power within the executive branch. On a third round of voting, Piña was elected to replace Minister Arturo Zaldívar in a 6-5 vote.
In a two-day trip January 9 and 10, Joe Biden will visit Mexico for the first time as President of the United States with the revival of the so-called “Three Amigos” summit of US, Canadian and Mexican presidents, the first since 2016. Biden will hold bi-lateral talks with Mexican President Andrés Manuel López Obrador (AMLO) on January 9, where immigration ranks high in a long list of topics for discussion, tied to discussions on labor mobility and border security. For Mexico, AMLO would like to cement a multi-billion-dollar loan facility to ramp up clean energy projects. The second day will involve trilateral talks to include Canada’s Prime Minister Justin Trudeau. The agenda for the three-way talks is also extensive, but it will be important to watch for any developments on the ongoing USMCA free-trade agreement dispute launched last July by US and Canada against Mexican energy policy favoring state-owned entities.
On Thursday, January 5, just days before Biden’s arrival, authorities captured Ovidio Guzmán, the son of legendary drug kingpin Chapo Guzmán, during an operation in Sinaloa state capital Culiacán. The drug traffickers mounted a brutal response to the arrest, burning vehicles to block major thoroughfares with residents ordered to shelter in place during hours of artillery-scale gunfire. Thursday’s operation will undoubtedly serve to demonstrate Mexico’s commitment to control violence ahead of the summit,
Mexican center-left political party PRD has filed a complaint with the national elections authority (INE) alleging that lawmakers with the president’s populist-left Morena Party in conjunction with Claudia Sheinbaum, Mexico City mayor and potential AMLO successor in the 2024 presidential elections, posted billboards in more than 20 cities nationwide that explicitly mention Sheinbaum and bear her image.
TRADE & ECONOMICS
The Finance Ministry nominated the relatively unknown Omar Mejia Castelazo as deputy governor of the central bank, replacing the dovish but highly respected Gerardo Esquivel whose term has just ended. Mejia Castelazo has been an advisor to the current Central Bank since 2019, but as an UNAM economist who worked for the Mexico City government previously, he is likely ideologically different from the US-trained neoliberals that populated the Central Bank board in previous administrations.
Remittances sent to Mexico for November were US$4.801 billion. While this marked an annual 3% increase, the inflows fell below US$5 billion for the first time in six months. Despite the slowdown, remittances to Mexico in 2022 amounted US$53.139 billion during the first 11 months of 2022, surpassing the 11-month record set in 2021.
Following the central bank’s report on November remittances, AMLO estimated the full-year total for 2022 would reach US$58.44 billion. This would reflect the most remittances recorded by the central bank for any year, as well as a 13% year-on-year expansion over 2021, but lower than the US$60 billion estimate given by the president less than a month ago.
The Consumer Confidence Indicator (CCI), a measure which provides an indication of consumers’ future consumption and savings habits, increased 0.6 points in December 2022
Mexican statistics agency INEGI’s global business confidence indicator (Igoec) fell 1.4 points from 46.4 in November to 45 in December. This marks the sixth month in negative territory, i.e. where readings below 50 units mark contraction. It is the lowest reading for the metric in the last 22 months.
Mexico's manufacturing purchasing managers' index (PMI) rose 0.7 from November to December, surpassing the 50-point threshold for the fourth consecutive month. The uptick reflects newly rebounding activity in manufacturing and a greater purchase of inputs.
NEWS ABOUT MEXICO IN THE FOREIGN PRESS
China becomes Mexico's largest automotive supplier
Líder Empresarial, Carlos Cruz
Violence hits Mexico cartel stronghold as 'Chapo' son nabbed
06/01/2023, The Washington Post, Mark Stevenson and MarÍa Verza | AP
Murphy Oil fails to strike hydrocarbons in offshore Mexico
06/01/2023, Reuters, Staff
Mexico Surprises Banxico Watchers With Unexpected Board Pick
05/01/2023, Bloomberg, Max de Haldevang
U.S. to provide $23 mln in immigration aid to neighbors, ambassador to Mexico says
05/01/2023, Reuters, Staff
AMLO to Ask Biden for Energy, Semiconductor Support at Summit
05/01/2023, Bloomberg, Max de Haldevang
Mexico Presidential Aspirant Lays Out Her Plan for Energy Sector
05/01/2023, Bloomberg, Staff
Biden intends to make his first visit to US-Mexico border
04/01/2023, The Washington Post, Seung Min Kim and Colleen Long | AP
In Mexican border prison where 30 escaped in deadly attack, inmates ruled cellblocks
04/01/2023, The LA Times, Staff
Collapse, contamination: Mexican scientists sound alarm at Mayan Train
04/01/2023, Reuters, Cassandra Garrison/ Jose Luis Gonzalez
Mexican president says sent letter to Biden to broach topics for summit
04/01/2023, Reuters, Staff
Mexico Expects State Oil Giant Pemex to Pay Its Debt Without Help
03/01/2023, Bloomberg, Amy Stillman/Max de Haldevang
Mexico elects first female Supreme Court president
02/01/2023, Reuters, Staff
Mexico Prison Break Leaves 17 Dead and Gang Leader on the Run
02/01/2023, Bloomberg, Maya Averbuch
Remittances to Mexico drop in November amid economic crunch fears
02/01/2023, Reuters, Staff
‘OK, Mexico, Save Me’: After China, This Is Where Globalization May Lead
01/01/2023, The New York Times, Peter S. Goodman
15 dead, 47 injured in Mexico bus crash
31/12/2022, NBC News, Staff
Analysis: Is the party over? Mexico's peso could lose solid gains in 2023
29/12/2022, Reuters, Noe Torres
Mexico City Weighs Regulating Airbnb as Home-Sharing Booms
29/12/2022, Bloomberg, Maya Averbuch/ Nacha Cattan
A Mexican Supreme Court justice fights a plagiarism scandal
28/12/2022, Los Angeles Times, Leila Miller