Mexico’s governors tap investors in China, elsewhere

3/30/2017 Reuters

mexico-chinaMexico’s states are turning to Asia and beyond as some U.S. companies put investment plans on hold south of the border following President Donald Trump’s calls to bring jobs back home.

A delegation of three Mexican state leaders, headed by the National Confederation of Governors (Conago), traveled to China this week to meet with business leaders and discuss investment opportunities.

“Conago is developing an agenda with China’s provinces to build investment projects in our country,” Conago tweeted on Wednesday. “China and Conago agree on building bridges for business, not walls.”

Fears of a hit to foreign investment ran high when Ford Motor Co (F.N) canceled a $1.6 billion plant in Mexico’s central state of San Luis Potosi in January.

Trump, who had railed against U.S. manufacturers investing in Mexico, hailed the decision as a major victory, but Ford put it down to declining demand for small cars.

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Carlos Slim teams up with Chinese to focus on Mexican market

3/27/2017 Financial Times

CarlosSlimCarlos Slim’s Giant Motors will begin manufacturing cars in Mexico in a joint venture with China’s JAC Motors as they focus on the Latin market.

This comes as some car makers have fallen foul of Donald Trump’s “America first” policies because they manufacture in the low-cost nation.

Two Chinese-designed and largely Chinese-manufactured sport utility vehicles will be launched on Tuesday as the new venture aims to cash in on Mexico’s booming domestic car market.

Giant Motors, the Mexican vehicle assembler backed by the billionaire investor, will focus on domestic sales and exports to the south with the new venture, instead of looking north to the US.

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Mexico central bank seen slowing pace of hikes after peso rally: Reuters poll

3/27/2017 Reuters

piggy bank with coinsMexico’s central bank is expected to raise its benchmark interest rate this week for the fifth meeting in a row, but policymakers are seen slowing the pace of hikes after a rally in the peso, a Reuters poll showed on Monday.

The Banco de Mexico is likely to raise rates on Thursday by a quarter percentage point to 6.50 percent, according to 15 of 24 analysts surveyed by Reuters. Seven thought the bank could deliver a half-percentage point hike, while two saw no move.

Mexico’s central bank raised its benchmark rate in 50-basis point moves in its previous four meetings as the peso tumbled to successive historic lows and threatened to fan inflation.

The peso has rallied back from a record low in January on bets that U.S. President Donald Trump will not impose big tariffs on Mexican exports to the United States, while initial talks about trade have taken a more positive tone.

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Mexican leftist casts shadow over Mexican banking convention

3/25/2017 Reuters

Andres_manuel_lopez_obrador_oct05Mexican financiers and politicians blasted populism at a top banking conference this week in a thinly veiled attack on the frontrunner for the 2018 presidential election – but some worry they overdid it and may have played right into his hands.

The chosen theme of the annual meeting at the beach resort of Acapulco was “liberalism versus populism,” with President Enrique Pena Nieto, senior ministers, former U.S. Treasury Secretary Larry Summers and ex-Secretary of State Colin Powell among the grandees squarely lined up on one side.

Without a voice but very much on the lips of the Mexicans was Andres Manuel Lopez Obrador, a leftist former Mexico City mayor and twice presidential runner-up whose relentless campaigning has put him in contention to go one better in 2018.

Lopez Obrador’s broadsides against corruption and inequality sting a Mexican political establishment tainted by allegations of graft, even as U.S. President Donald Trump’s populist jabs at Mexico have generated some sympathy for Pena Nieto at home.

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Mexico Will Hedge Oil Export Prices for Next Year, Rubio Says

3/25/2017 Bloomberg

Oil barrelsMexico plans “without a doubt” to protect the country against low crude prices for next year, Deputy Finance Minister Vanessa Rubio said in an interview, in a continuation of what’s become the world’s largest commodities hedging program.

The amount of Mexico’s export basket to be protected through market operations, versus through its stabilization fund, has yet to be determined, Rubio said in an interview on the sidelines of a banking conference in Acapulco. All options are open to reduce volatility of the peso, which is undervalued when economic fundamentals are taken into account, Rubio added.

Mexico, the world’s 11th-largest oil producer, spent $1 billion last year to buy put options that lock in an average price for its exports this year, and set aside close to $1 billion more from its budget stabilization fund to effectively guarantee oil revenue of $42 a barrel. West Texas Intermediate crude for May delivery closed Friday at $47.97 a barrel.

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Mexico seeking opportunities to tap debt markets

3/24/2017 Reuters

4350685550_dbd28c7e50Mexico is closely looking for windows of opportunity to issue more debt and improve its loan portfolio, Finance Ministry Undersecretary Vanessa Rubio said in an interview on Thursday.

Mexico last week announced a new $3.15 billion 10-year bond issue, its first transaction in the dollar bond market this year. This follows a bounce in emerging market assets following relatively dovish talk by Federal Reserve head Janet Yellen.

“Our debt issuances in international debt markets have been highly valued and we’re not obligated to issue any more because our debt requirements have been met,” Rubio told Reuters on the sidelines of a banking conference in the seaside-resort city Acapulco. “Still, we’re monitoring market conditions to see if there are windows of opportunity to take advantage of to improve our position.”

Mexican issuers had stayed clear of the dollar market in 2017 as heated rhetoric over U.S. President Donald Trump’s trade policies pummeled both the peso and debt prices.

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Mexico vulnerable, but outlook improving – finance minister

3/23/2017 Reuters

jose antonio meade
Source: Eneas De Troya/Flickr

Mexico’s economy may face further volatility, but the outlook for the country is less gloomy, Finance Minister Jose Antonio Meade said on Thursday.

“We are not exempt from seeing and living a period of great volatility, but the scenarios are becoming more contained,” Meade told local radio.

The Mexican peso slumped to a record low in January on concerns that U.S. President Donald Trump could rip up a free trade deal with Mexico, but it has recovered as the country’s northern neighbor has taken a more conciliatory tone.

The recovery in the peso from its January low will help inflation cool back toward policymakers’ 3 percent target, central bank chief Agustin Carstens said on Wednesday.

Data on Thursday showed Mexico’s annual inflation rose to 5.29 percent in early March, its fastest pace in nearly eight years, and Carstens said in a radio interview on Thursday that policymakers had some room to continue raising interest rates.

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