The Mexican stock exchange (BMV) It sank this Monday 6% after the overwhelming victory in the presidential elections of the ruling party Claudia Sheinbaum and the dominance that his coalition outlines in Congress, which would allow the Constitution to be reformed. The main indicator of the stock market, the Price and Quotation Index (IPC), thus lost 3,315.85 pointsso it stood at 51,863.39 units at the close of the day.
Besides, The Mexican peso lost 4.3% to close at 17.7 units per dollar, according to figures from the Bank of Mexico (central, Banxico) at the close of the session this Monday, compared to 16.96 units per greenback last Friday. For months, the dollar had traded below 17 pesos, driven by the high interest rates offered by the country, the impact of remittances and Foreign Direct Investment (FDI).
“The markets reacted negatively to the electoral results because it is very likely that Morena will obtain a qualified majority in Congresswhich makes possible the approval of pending constitutional changes,” Víctor Ceja, chief economist at the financial firm Valmex, told AFP. Gabriela Siller, an analyst at the firm Banco Base, told the press that Sheinbaum should give a message of calm to the markets.
“The best thing would be to go out and say that The autonomy of the Bank of Mexico will not be changed, its mandate will not be changed, there will be fiscal discipline and the division of powers will not be touched nor the autonomous bodies,” he noted.
With the count of almost 90% of the votes according to the platform of the National Electoral Institute (INE), Sheinbaum, 61, had 59% of the votes, thirty points above her closest follower, the center-right Xóchitl Gálvez. Besides The left-wing coalition, made up of the ruling Morena, the Green Party and the Labor Party, has two thirds of the Chamber of Deputies and it will probably reach them in the Senate as well.
This would allow the ruling party to approve profound constitutional modifications that the government of the outgoing president, Andrés Manuel López Obrador, failed to carry out. Among these changes is the so-called “Plan C”, which implies a profound reform of the Judiciary so that judges and magistrates are elected by popular vote.
The risk rating agencies want to mark the field for Sheinbaum
The credit agencies S&P and Fitch They said on Monday that The Government of the elected president of Mexico, Claudia Sheinbaum, will face challenges in public finances, particularly pointing to the fiscal deficit and weaknesses of the state oil company Pemex.
Climate scientist Claudia Sheinbaum, protégé of the popular president of Mexico, Andrés Manuel López Obrador, She obtained an overwhelming victory in the elections held the previous day that will make her the first woman in charge of the country.
The new administration “will face challenges in public finances, including a fiscal deficit that has recently grown and long-standing weaknesses at the state-owned company Pemex,” he said. S&P it’s a statement.
S&P believes that if measures such as those of the current Government in Mexico, which has reduced the independence of several agencies, continue, reforms that weaken the checks and balances of powers could affect the confidence of private investors and affect economic growth and solvency.
Although Sheinbaum’s speech was characterized by being environmentalist and seeking to promote renewable energies, both S&P and Fitch, in separate notes, pointed to a high probability that the new Government will financially support the state oil company.
“The incoming administration has advocated for maintain the important role of Pemex in the country’s oil marketwhich will imply continued transfers from the federal government in the absence of significant improvements in the company’s operational efficiency,” Fitch noted.
S&P maintained that, to support the oil company, The new government could even make “tax cuts or budget transfers, perhaps along with reforms to strengthen the company’s operations and address its internal weaknesses.”
Source: Ambito
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