Global Investment Guide: How To Invest In Mexico

5/18/16 Forbes

Mexico BricksLooking at the country through an economist’s lens, Mexico’s economy can be described as mostly predictable and rarely volatile. However, the same cannot be said of Mexico’s stock and bond markets and currency. Given strong links to the United States’ economy, Mexico’s macroeconomic variables tend to move broadly in conjunction with the ups and downs of its northern neighbor. When the U.S. is expanding, so is Mexico; if the U.S. is in a recession, so is Mexico. However, Mexico’s asset prices tend to act and react to their compatriot emerging market asset classes – which are much more volatile. That said, Mexico’s principal asset classes tend to be “low beta” versions relative to most emerging markets (EM), so that when EM equities or bonds do very well, Mexico lags, but when EM sells off, Mexico acts like a relative safe haven. The Mexican peso is another matter.

Mexico has several things going for it. As mentioned above, the country has forged strong links with the U.S., especially after the formation of NAFTA. As the country has an abundance of relatively cheap labor, it was an ideal, close-proximity destination for manufacturing plants from the U.S. and Canada. Through time, the country has benefited from technology transfer and has been able to increase the skills of its workforce. Second, for most of the last few decades, well-trained and well-respected policymakers have been at the helm of Mexico’s central bank and finance ministry. Under their leadership, Mexico has been able to weather several global crises and also transitions to different presidential leadership, by implementing conservative fiscal policy and prudent monetary policy.

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Mexico’s Pemex could relinquish majority stake in refineries: CFO

5/13/2016 Reuters
Pemex LogoMexico’s state-owned oil company Pemex is seeking partners to operate its money-losing refineries and plans to “dilute” its ownership in the plants, even selling majority stakes, the firm’s financial chief said on Friday.

Chief Financial Officer Juan Pablo Newman said in an interview that Pemex is seeking private sector expertise to make its six domestic refineries more efficient, as an extended crude price slump and years of underinvestment in its downstream assets has battered the company’s bottom line.

“We may not have a majority stake in the refineries, but we are going to dilute our participation,” said Newman at his office on the 38th floor of Pemex’s headquarters in Mexico City.

He said Pemex aims to spend about 30 billion pesos ($1.65 billion) on its refineries this year, while it seeks additional investment from private partners.

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Not in Our Backyard: Developers Hit Wall in Ritzy Mexico City Neighborhood

5/10/2016 Wall Street Journal

6142323949_5d5f048f77_mMEXICO CITY—Developers in one of the Mexican capital’s most affluent neighborhoods are facing stiff opposition to new commercial projects from residents who fear they will further strain the city’s outmoded infrastructure.

The neighborhood, Lomas de Chapultepec, is in the center of a debate over the merits and perils of densification.

In car-choked Mexico City, public transportation is spotty and outdated, while pollution prompted authorities last month to ban at least 20% of all cars from the roads every weekday in an effort to reduce unhealthy levels of smog. Other essential resources, like water, are strained as well.

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EVENT TOMORROW | Power Play: Energy & Manufacturing in North America

power playWHEN: Tomorrow, Tuesday, May 10, 9:00-10:30am

WHERE: 6th Floor Auditorium, Woodrow Wilson Center

Click to RSVP.

The Wilson Center’s Mexico Institute, Canada Institute, and the International Monetary Fund are pleased to invite you to our launch of the book “Power Play: Energy and Manufacturing in North America.” Despite the recent fall in energy prices, fuller development of energy resources in North America has potentially important implications for global energy markets and the competitiveness of North American manufacturing industries. The book “Power Play: Energy and Manufacturing in North America” describes the transformation of the energy landscape in North America due to the upsurge in unconventional energy production since the mid-2000s and tells the story of the energy-manufacturing nexus from the perspective of Canada, Mexico, and the United States, and the region as a whole. Based on the research done at the International Monetary Fund, the book discusses the energy boom and its macroeconomic implications for the three countries individually and for the region overall, exploring also how the changing energy landscape can affect the potential benefits of greater integration across the three North American economies.

Keynote Speaker

Alejandro Werner
Director, Western Hemisphere Department
International Monetary Fund

Additional Speakers

Lusine Lusinyan
Senior Economist
International Monetary Fund

Carlos Hurtado
Alternate Executive Director for Mexico
International Monetary Fund

Jim Prentice
Global Fellow, Canada Institute, Wilson Center
Former Premier of Alberta
Former Minister of the Environment, Canada

Meg Lundsager
Public Policy Fellow, Wilson Center
Former U.S. Executive Director and Alternate Executive Director, International Monetary Fund

Moderator

Duncan Wood
Director, Mexico Institute, Wilson Center

Click to RSVP.

 

Op-Ed | Getting North America Right

5/9/2016 Mexico Institute blog, Forbes.com

By Earl Anthony Wayne, Public Policy Fellow, Wilson Center

nafta (2)When the leaders of Canada, Mexico and the United States meet on June 29 for a North American Leaders Summit (NALS), they will have two big tasks: 1) to explain clearly why cooperation between the three countries is of great value; and 2) to give clear directions to their officials to do the hard technical work so that cooperation produces solid results for economic growth and competitiveness, for mutual security, for the shared continental environment, and for international cooperation where we can do more together than individually.

Since Mexico hosted the last so-called “Three Amigos” Summit in 2014, the tone in the U.S. domestic political debate has turned very critical of cooperation across the continent, whereas the actual collaboration and mutual understanding between the governments has improved.  The potential to help make all three countries more competitive in the world and to become a model for regional cooperation has increased, even as the electoral campaign attacks on the relationship with the United States’ two top export markets sharpened starkly.

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The multifaceted metamorphosis ahead for Mexico’s energy markets

5/6/2016 S&P Global Platts

Energy -electricity_transmission_linesThe Mexico energy market has been a hot topic ever since late 2013 when the government decided to liberalize the energy sector, opening it up to foreign investment.

The reform provides an unprecedented opportunity for international companies to participate in development of the nation’s vast oil resources as PEMEX unwinds its current monopoly. Multiple other opportunities exist in the power sector, in renewables development and in the natural gas pipeline sector.

The energy reforms were largely a result of the steep decline of the country’s oil production, inadequate financial resources to turn production around and an inability of PEMEX to keep pace with the technological change taking place in the industry.

Mexico ranks sixth in the world for non-conventional oil and gas resources, right behind Canada and Algeria, but lacks the financial resources to develop its reserves. It would take US$20 billion to extract the country’s reserves over a 210-year period and $87 billion to do it in 50 years. It also would not be possible to do this with one state-owned exploration and production monopoly — this is why the reforms were necessary.

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Steven Chu: Mexico’s Energy Auction Reveals True Price Of U.S. Renewables

5/8/2016 Forbes 

energy -wind_energyIf you want to know the true price of renewable energy in America—free from subsidies and mandates—look to Mexico, former Energy Secretary Steven Chu said Friday.

In March, Mexico’s state utility, Comisión Federal de Electricidad (CFE), departed from almost 80 years of state-owned monopoly and let private companies bid to supply solar, wind, hydro, cogeneration, combined-cycle gas, and geothermal energy.

“The cost was about 4¢ a kilowatt-hour without the mandates, in both solar and wind,” Chu said Friday at Stanford University, where he now teaches. “Four to four-and-a-half cents with no production tax credit, no investment tax credit, no renewable portfolio standard. It’s just money, including profit. This is pretty good news.”

A GTM Research analyst revised the average price slightly higher, to about 5¢/kWh, but that price, too, is much lower than most experts would have predicted renewables would be in 2016.

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