MARKETS
The S&P / BMV IPC jumped 2.2% over the past week, following the rally in US markets, despite Trump’s threat to impose tariffs on Mexican goods starting February 1st. The S&P 500 reached a record high, boosted by strong reports in the financial sector, as well as comments from President Trump, calling for interest rate cuts and lower oil prices. Meanwhile, the Mexican peso recovered 2.2% to MXN$20.39/USD after a roller coaster week, while the yield of the yield of the Mexican 10-year M-Bono was down 31 bps to 10.02%.
The S&P / BMV IPC’s top stock gainers for the week were: BIMBO A (+8.9%), ALFA A (+7.7%), and LAB B (+6.5%). The index’s biggest losers were: KOF L (-3.7%), CUERVO * (-3.0%) and GAP B (-2.4%).
Next week, we expect the following macroeconomic indicators: preliminary 4Q24 GDP, trade balance, unemployment rate, ANTAD sales, and public balance.
LISTED COMPANIES
GFInbursa’s 4Q24 loan portfolio increased 36.4% YoY, reflecting a robust expansion in both retail and wholesale segments and last year’s Cetelem acquisition. The NPL ratio improved slightly to 1.56%, from 1.6%, though provisions saw a substantial 40.5% rise, reflecting a conservative approach to anticipated credit risks in an expanding portfolio. Deposits were up 26.7%, driven by greater customer confidence and a broader array of products. The adjusted financial margin grew 28.2%, driven by higher interest income from the growing loan base. The efficiency ratio improved to 15.8%, from 18.2%, indicating better cost management relative to income generation. However, net profits for the quarter declined 12.0% due to lower trading gains.
Kimberly-Clark de México’s revenues were up 3% YoY, driven primarily by a 3% rise in consumer and 7% export growth. Gross profit declined 1% YoY, with a gross margin of 39.1%, slightly down from the previous year influenced by cost increases in certain raw materials and the impact of the peso depreciation. This was partially mitigated by effective cost reduction initiatives amounting to MXN$500 million during the quarter. EBITDA decreased 6% YoY, resulting in an EBITDA margin of 25.4%. Excluding a MNX$130 million restructuring charge, the EBITDA fell 4% with a 25.9% margin. Net income declined 7% YoY.
AMX informed that its previous external auditor, Mancera/EY, has withdrawn its opinion relating to the effectiveness of the company’s internal control over financial reporting (“ICFR”) as of December 31, 2023, after it found some deficiencies at Telmex and other subsidiaries, particularly related to fixed-line operations in Mexico. The external auditor confirmed that this did not affect the company’s 2023 consolidated financial statements. The company will continue to work closely with Mancera/EY to address their comments. The company intends to amend its 20-F form accordingly. AMX is now working with Deloitte, perhaps unsurprisingly making a change.
Fibra Inn will likely undertake some acquisitions to diversify into other sectors, while seeking to divest from non-strategic assets, according to its CEO, Miguel Aliaga. The Fibra considered that there are opportunities in the luxury hotel segment, which has more barriers to entry.
Vinte appointed Melito Hernández Baeza as Director of Construction, replacing Antonio Blas Zúñiga Hernández, who resigned, but will remain a Board Director and will be an independent consultant for a 30-month period to supervise the company’s construction area.
OTHER COMPANIES
The IFT approved the acquisition of a 23.08% equity stake in Altan Redes by the CFE with the following conditions: i) assure an independent operation between Altán Redes and the CFE to avoid information sharing that generates discriminatory treatment against other wholesale telecommunications services; and, ii) CFE’s obligation to relinquish its wholesale telecommunications concession to assure that no telecommunications provider influences the operation of Red Compartida by Altan Redes.
PuntoPost, a Mexican startup specializing in merchandise collection points, raised US$1.5 million in an investment round led by 4Founders, JME Ventures, Latin Leap, Lanai and Inclimo and included the participation of angel investors specialized in e-commerce and in and out-of-home (OOH) delivery.
TRADE AND ECONOMICS
The inflation rate was 0.20% in the first half of January, INEGI reported, which was below the 0.27% expectation according to the last Citi Mexico Expectations Survey. This translated into a last 12-month inflation rate of 3.69%, the lowest level since February 2021. The core inflation rate stood at 0.28% in the 15-day period, slightly above the 0.23% consensus forecast, with merchandise up 0.49% and services rising 0.07%. This led to a last 12-month core inflation rate of 3.72%. Meanwhile, the non-core inflation rate decreased 0.04% in the period, driven by a 0.99% reduction in agricultural prices and a 0.70% increase in energetics and government authorized tariffs.
Retail sales were down 0.1% MoM (seasonally adjusted data) in November, INEGI reported, which was below the 0.3% consensus increase. This was the second consecutive period with a monthly decrease. Retail sales fell 1.9% YoY in November (original figures), below the -1.2% consensus estimate, and accumulating seven months with annual contractions.
The IGAE was up 0.4% MoM (seasonally adjusted data) in November, slightly above the 0.3% consensus forecast and October’s 0.7% monthly contraction, driven mainly by a 0.5% increase in tertiary activities and a 0.1% rise in secondary ones, which were partially offset by a 1.4% reduction in primary activities. With original data, the IGAE grew 0.5% YoY, marginally below the 0.6% consensus expectation and slowing down against October’s 0.8% increase. Tertiary activities were the main driver with a 1.6% rise.
Economists continue to predict a 25 bps reduction (unchanged from the last survey) in Banco de Mexico’s key interest rate during the February meeting, according to the most recent Citi Mexico Expectations Survey. However, the number of economists forecasting a 50 bps cut increased to 13 out of 30, from 8 in the last survey. They also expect the Banco de México interest rate to close the year at 8.50% in 2025 and 7.50% in 2026 (unchanged in both cases); a YE FX rate of 20.95 (unchanged) in 2025 and 21.49 (from 21.48) in 2026; a headline inflation of 3.91% (unchanged) in 2025 and 3.77% (from 3.80%) in 2026; a core inflation rate of 3.68% (from 3.71%) in 2025 and 3.60% (from 3.61%) in 2026; and a GDP growth of 1.0% in 2025 and 1.8% in 2026.
The Mexican Government announced MNX$30 billion in fiscal stimuli as part of the “Plan Mexico” to support new investments and strengthen the “nearshoring” strategy. The deductions range from 67-91% during the 2025-2026 period and from 62%-89% in the 2027-2030 period. They will be supervised by an evaluation committee chaired by Rogelio Ramírez de la O and Marcelo Ebrard. The main beneficiaries will be the TI, construction, textile, leather garments and electric vehicle industries.
Banco de Mexico is expected to generate a MXN$110 billion budget surplus representing 0.3% of the country’s GDP, according to Banamex estimates.
Mexico and the European Union have concluded the modernization of their Free Trade Agreement, which is aimed at fostering trade between the regions (which reached €104 billion in 2023) and boosting European foreign investment. It will also reduce tariffs on various European agriculture products such as cheese, wine, pork, pasta, apples, and chocolates; will protect 568 European denominations of origin and will accelerate administrative procedures.
US President Donald Trump threatened to impose 25% tariffs on Mexican imports from next February 1st. He also requested a revision of US trade policies, including the USMCA, with an April 1st deadline. His main objective apparently is to accelerate the revision of the USMCA to strengthen origin rules for car production.
CETES auction: 28-day CETES -3 bps to 9.75%; 91-day CETES -11 bps to 9.74%; 182-day CETES -5 bps to 9.71% and 350-day CETES -21 bps to 9.78%.
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