Weekly Mexico Market Monitor

Friday AM, December 2, 2022

Dec 09, 2022

MARKETS

The IPC (top 35 Mexican stocks) closed December 1 at 51,517.35 pesos, down -0.89% from its November 24 close of 52,016.61 pesos on November 24. The 3.92% year-to-date decline in the IPC is still outperforming the S&P500 (-14.47% YTD).

The MXN/USD exchange rate closed at 19.15 pesos to the dollar December 1, up from 19.38 pesos on November 24.

The Mexican 10-year bond (2031) closed Thursday with the yield at 8.99%, down from 9.09%, on November 24.

The IPC Top Stock Gainers for the week were: GMEXICOB (+10.56%), BBAJIOO (+4.78%), and VESTA* (+4.77%), and the Biggest Losers were: SITES1 (-8.01%), BIMBOA (-5.89%), and AMXL (-5.82%).  

CORPORATE & MARKET NEWS

Grupo México’s shares lost 2.84%, falling to 72.93 pesos, after its owner Germán Larrea emerged as the bidder most likely to acquire Citibanamex's commercial and consumer banking business. The company is also making progress in its discussions with the Mexican government over the cancellation of its Tren Maya contract. Negotiations are focused on the compensation the company will receive for the early termination of the contract to construct the section that runs between Tulum and Cancun.

América Móvil issued four bonds that together raised 24 billion pesos, with which the telco looks to finance sustainability programs and other projects as well as refinance some liabilities. The company raised 80% of the $30 billion pesos it had hoped to raise, according to information made available on the BMV data platform..

Coca-Cola FEMSA products will see price increases of between 1 and 2 pesos starting December 1, according to new price lists being provided to vendors. This is the company’s third set of prices increases in 2022. The company also announced that its board of directors appointed Gerardo Cruz Celaya as its new CFO, replacing Constantino Spas Montesinos, effective January 1, 2023.

Grupo Lamosa’s long-term credit ratings received upgrade from HR Ratings to 'HR BBB+ (G)' from 'HR BBB (G)' due in part to its successful refinancing of a $200 million dollar loan and improved revenue over the last 12 months.

Grupo Sanborns received a local rating ratification of 'HR AAA' from HR Ratings, the highest possible, with a stable outlook based on the expected continuity of its negative net debt.

Walmart de México y Centroamérica is still looking to consolidate its Walmart Connect business, a division that develops advertising campaigns for various consumer brands. To that end, the retailer announced the launch of Walmart DSP in the region, a platform for brands and agencies to enhance advertising campaigns by integrating data on purchasing habits to boost visibility and sales.

Stellantis Mexico said it plans to wage an "aggressive" battle in 2023 to win a majority market share, launching 16 new products focused on the fastest growing segments: SUV's, vans and pickups. Multi-purpose vehicles continue to be in highest demand among Mexican consumers. The company also wants to take advantage of the current e-commerce boom seen with electric vans.

Corporación Actinver announced the resignation of María Elena Calatayud Hernando as an independent member of the board of directors and as a member of various committees of the company and its subsidiaries.

Genomma Lab Internacional, a Mexican producer and distributor of pharmaceutical and personal care products, announced Marco Sparvieri will be its new CEO, replacing Jorge Brake. The change in the company's management will take up to six months, in which both executives will work together to finalize the transition plan announced by Genomma Lab.

Mondelēz International, an international processed food manufacturer, will pay approximately $6 billion pesos in taxes for the acquisition of the Ricolino candy brand from Grupo Bimbo, according to Mexican government estimates.

Fibra Prologis bought two buildings in Tijuana with a GLA of 535,861 sq. ft for US$56.5 million as the company prepares for continued growth in nearshoring.

GF Banorte continues to return money to shareholders after dropping out of the Banamex bid. It approved a P$16.8 billion dividend (3.9% yield), and a buyback fund of P32.3bn.

POLITICS

The Morena party, along with its allies (the Green and Labor parties), postponed the floor discussion in the lower house on the president’s electoral reform package discussion in the Plenary of San Lazaro to December 6th to give legislators more time to study the most recent changes made to the bill, said Ignacio Mier, the head of the Morena bloc in the lower house.

The INE fined national and local political parties a total of 673 million pesos for wide-ranging irregularities occurring in 2021, including unverified or untimely expenses and for discrepancies in audited reports. Morena and the Labor Party (PT) were the most heavily sanctioned parties.

The Supreme Court ruled that President Andrés Manuel López Obrador acted unconstitutionally by not selecting and sending his candidates for members of the federal competition watchdog (Cofece) to the Senate.

López Obrador said he expects to reach agreements to raise the national minimum wage by a about 20% in 2023 via negotiations between the government, business leaders and labor representatives. will increase the national minimum wage by about 20% next year. The president said the minimum wage needs to increase despite inflation, arguing that the history of past increases did not place additional pressure on prices.

The council of representatives of the National Minimum Wage Commission has established a standing commission to discuss the proposals for the minimum wage increase in 2023. Conasami, the body responsible for determining the minimum wage in the country, said the negotiation process will begin with the various stakeholders and interested parties presenting their own proposals to the commission.

The Institutional Revolutionary Party’s (PRI) national committee (CEN)is preparing an initiative to establish a regulatory framework for the operation of coalition governments as established in the Constitution. PRI party leader Alejandro Moreno said the initiative would build a solid framework for transforming electoral and legislative coalitions into effective government institutions with legal-political responsibility.

A Morena-proposed initiative to increase the legally required number of annual vacation days from 6 to 12 has been postponed at the request of the lower house majority leader Mier. Any new changes to the proposal would mean it could not be approved this year the reform would not be approved until 2023.

President Andrés Manuel López Obrador said he still does not know if he will confirm Gerardo Esquivel for a second term as central bank deputy governor; however with Esquivel’s first term ending on December 31, the president’s decision is expected in the next 10 to 15 days. The president added that finance minister Rogelio Ramírez de la O is also looking into the matter.

Some 400 Venezuelan migrants were evicted Sunday in Ciudad Juarez from the makeshift refugee camp where they had been residing on the southern shore of the river marking the US-Mexico border, AFP reported. City officials said the operation was in response to a report prepared by the local civil defense entity that warned of the fire risk presented by campfires used by migrants to warm in cold weather in close proximity to plastic tents.

TRADE & ECONOMICS

Mexico’s central bank (Banxico) made solid upward revisions to its estimates for GDP growth in 2022 (to 3.0% from 2.2%) and 2023 (1.8% from 1.6%), as announced at, it would grow 1.8% from 1.6%, during its 3Q22 quarterly presentation. It’s projections for headline inflation at the close of 2022 and end-2023, at 8.3% and 4.1%, respectively, were unchanged from its previous estimates.

With its quarterly report, released Wednesday, Banxico governor Victoria Rodríguez stressed that while both the core and non-core price indices have shown positive signs recently, the risks to core remain high, and the risks to higher inflation are essentially unchanged from the previous quarter.

Statistic agency INEGI’s monthly economic activity monitor (IGAE) marked a solid 0.7% month-on-month increase in September with seasonally adjusted figures, up from the 0.4% monthly reading in August, a sign the economy is on an upward trajectory moving to October and the 4Q22.

INEGI also published its final estimate on 3Q22 GDP growth 0.9% quarter-on-quarter expansion during July to September compared to the previous three months The result brings annual GDP growth through September to 4.3% compared to 3Q21.

Mexico current account in the third quarter registered a deficit of $5.505 billion dollars, the equivalent of 1.6% of the national GDP, according to the central bank’s balance-of-payments report on the quarter. This deficit was 27.3% larger than that of the same period in 2021.

Mexico’s exports were up 17.7% YoY in October compared to the same month in 2021, marking the 12th consecutive monthly increase in export levels, INEGI reported.. Imports rose 14.8% compared to the same month in 2021, the 20th consecutive monthly increase.

Mexico's unemployment rate, as a percentage of the economically active population, remained stable at 3.2% during October in real terms, according to INEGI’s latest ENOE employment survey. This was 0.6 percentage points lower than the metric reported for same month a year ago.

The relocation of companies’ supply chains closer to their target markets, a phenomenon known as nearshoring, stand to increase Mexican exports by an estimated $94.2 billion dollars over the next five years, according to an analysis by Morgan Stanley.

Michoacán’s state government has launched an initiative to become Mexico’s most important nearshoring hub on the Pacific Coast. The state seeks to attract Asian investments with development of strategic industrial parks like Bajío Uno in Morelia and expanded industrial capacity for the port of Lázaro Cárdenas and the Queréndaro station.

Tax authority SAT gave an extension for the implementation of its Internet Digital Tax Receipt (CFDI) 4.0 protocols to March 31, 2023. The platform is used by taxpayers that import or export merchandise, goods or services.

Competition watchdog Cofece has begun interviewing witnesses and relevant parties for an investigation launched in early 2022 into possible monopolistic practices in the industrial gas equipment, accessories and spare parts market.

NEWS ABOUT MEXICO IN THE FOREIGN PRESS

Analysis: Mexican president's electoral gambit breathes life into opposition

1/12/2022, Reuters, Diego Óre

Banxico Boosts Mexico Growth Forecasts Amid Services Rebound

30/11/2022, Bloomberg, Max de Haldevang and Maya Averbuch

Bank of Mexico Raises GDP Growth Forecasts for 2022, 2023

30/11/2022, The Wall Street Journal, Staff

U.S. Threatens Mexico Over Genetically Modified Corn Ban

30/11/2022, The Wall Street Journal, Kristina Peterson/Anthony Harrup

29/11/2022, Bloomberg, Max de Haldevang/ Rafael Gayol

Opinion: Mexico should stop its president’s latest antidemocratic maneuver

28/11/2022, The Washington Post, Editorial Board