MARKETS
The S&P / BMV IPC index lost 3.4% this week to close at 50,553, as investors turned cautious about the upcoming 2025 fiscal package (which will be presented on Friday November 15th), and the potential impact of Trump’s policies on Mexico. The stock market was also affected by the spike in the US 10-year bond yield and the US Dollar. The Mexican peso depreciated 3.4% accordingly.
The S&P / BMV IPC’s top stock gainers for the week were: Q* (+7.3%), bouncing back from previous losses, ASUR B (+1.4%) and CUERVO (+0.3%). The index’s biggest losers were: CEMEX CPO (-9.3%), which had led gains last week, PEÑOLES * (-8.0%) and TLEVISA (-6.9%).
Next week, we expect the following macroeconomic indicators: final revision of 3Q24 GDP, inflation rate, IGAE, and retail sales.
LISTED COMPANIES
The Mexican Government announced the “National Hydrocarbon and Natural Gas Plan”, which includes a new fiscal regime for PEMEX with a unique “Derecho Petrolero Para El Bienestar” (30% on oil production and 11.63% for gas), and an austerity plan aimed at saving MXN$50 billion by eliminating redundant expenses and 40 subsidiaries to improve operating efficiency. Secondary laws will be enacted in February next year. You can see our thoughts on the matter here.
AMX’s Telcel was the main beneficiary of number portability in 3Q24 after having received 319 thousand lines. MVNO’s remained in second place with 182 thousand lines. On the other hand, AT&T lost 457 thousand lines and Telefónica Movistar 44 thousand lines. AMX will have 6 months to modify its business strategy to comply with new asymmetric regulations, according to Adriana Helena Cruz de León, IFT Director of Quantification of Rights and Obligations, who was quoted by El Financiero newspaper. AMX’s shareholders approved a MXN$15.0 billion increase in its share buy-back reserve for the April 2024 – April 2025 period, and the cancellation of 1,975,260,000 treasury shares, representing 3.2% of outstanding shares.
LACOMER opened a new MXN$419 million “City Market” store in the Samara commercial center located in Mexico City’s Satélite neighborhood.
FIBRAPL extended its exchange offer for TERRAFINA’s CBFI’s to November 15th.
PEÑOLES notified FRESNILLO, that its Sabinas mine is experiencing operational difficulties impacting the silver production. The Sabinas mine represents 4% of PEÑOLES total silver production and 5% of FRESNILLO’s.
VINTE launched the tender and reciprocal subscription offer for up to 100% of JAVER shares at a price of MXN$14.94/share payable in cash and/or in VINTE shares with an exchange factor of 0.48193548 VINTE shares for each JAVER share. The tender offer will take place from November 13th to December 16th this year. VINTE will become the country’s largest housing developer with this transaction. JAVER’s Board of Directors issued a favorable opinion with respect to the acquisition price and exchange factor offered by VINTE for up to 100% of its shares.
The average daily rate of FIBRA INN’s operating hotels increased 9.7% YoY in October, reaching MXN$1,899. However, occupancy levels decreased 2.7 PP to to 63.0% as a result of this rate adjustment and traveler caution. RevPar rose 5.3% YoY to MXN$1,197, while hotel revenues advanced 6.8% YoY to MXN$209.8 million.
GENTERA’s subsidiary Banco Compartamos issued MXN$1.6 billion in Bank Certificates in the domestic debt market, under a social bond framework. The COMPART24-2S issuance has a 3.5-year term and carries an interest rate of TIIE28 + 56 bps. This brings the total amount issued this year to MXN$5.1 billion.
Steel manufacturer AHMSA was declared in bankruptcy by the second district judge specialized in “Concursos Mercantiles” (the Mexican version of Chapter 11).
PROTEAK was declared in bankruptcy by the first district judge specialized in “Concursos Mercantiles” (the Mexican version of Chapter 11).
OTHER COMPANIES
TOYOTA announced it will invest US$1.45 billion in its Baja California and Guanajuato manufacturing plants for the production of the new generation of Tacoma and Tacoma hybrid electric (HEV) pickup trucks.
VIVAEROBUS reported that total passenger traffic advanced 2.9% to 2.4 million in October, as a result of a 2.8% increase in domestic traffic and a 3.7% rise in international traffic. Capacity grew 5.0% but the load factor was 87.7%, from last year’s 89.9% level, as a result of the revision of Airbus’ P&W engines.
Mexican fintech KLAR is analyzing the possibility of listing its shares in both the domestic and international markets in 2026, according to the newswires. However, the company first needs to reach US$500 million in annual sales with a positive ROE at least for 12 months.
Argentinian Fintech UALÁ raised US$300 million in a Series E investment round, translating to into a US$2.75 billion valuation. UALÁ owns Banco ABC Capital in Mexico.
KANS CAPITAL, a Mexican private equity firm, acquired a majority stake in two Marriott-branded hotels in Stamford, Connecticut, for US$30 million.
TRADE AND ECONOMICS
Moody’s Ratings (Moody’s) changed the Outlook on the Government of Mexico’s ratings to negative, from stable, and affirmed the issuer ratings, senior unsecured long-term ratings at Baa2, and the senior unsecured MTN program and senior unsecured shelf long-term ratings at (P)Baa2. The outlook change is driven by Moody’s view of a weakening in the policymaking and institutional settings that risks undermining fiscal and economic outcomes. Deteriorating debt affordability and further government spending rigidity make fiscal consolidation challenging, following this year’s widening in the government deficit – a deviation from a longstanding track record of low deficits regardless of economic pressures. At the same time, the constitutional overhaul risks eroding checks and balances of the country’s judiciary system, with potential negative impact to Mexico’s economic and fiscal strength. Finally, Moody’s considers there is an increased likelihood that contingent liabilities stemming from Petróleos Mexicanos (PEMEX, B3 negative) could materialize onto the government’s balance sheet, while at the same time not restoring long-term debt sustainability for PEMEX and therefore maintaining fiscal risks for the government.
Banco de México reduced its key interest rate by 25 bps to 10.25% as broadly expected. In its press release, the institution said it expects the inflationary environment to allow further adjustments in the reference rate. It will take into account the prospect that global shocks will continue to fade and the effects of weak economic activity.
Industrial activity rose 0.6% MoM in September, rebounding from the 0.5% contraction in August, based on INEGI’s seasonally adjusted data. The manufacturing sector was the main driver with a 1.0% MoM increase followed by construction activity with +0.7%. On a yearly basis, industrial activity fell 0.4% (original data), which was the second consecutive month with an annual reduction, dragged down by the declines of 4.5% YoY in mining and 2.3% in construction -2.3% YoY.
ANTAD’s nominal same store sales growth slowed down to +1.7% YoY in October (from +3.1% in September and +5.4% in August). This was the worst performance for October since 2017. Total sales increased 4.3% (from +6.5% in September and +8.4% in August).
The Consumer Confidence Index (CCI) increased 2.0 points to a historically high level of 49.4 points in October, with a general improvement in all components, in particular the “country’s expected economic situation in the next 12 months” (+4.2 points) and “household members’ expected economic situation in the next 12 months” (+3.1 points). The CCI rose 3.4 points relative to the previous year, also supported by the same components.
Private consumption is expected to increase 1.8% YoY in September and 2.1% YoY in October, according to INEGI’s “Opportunistic Indicator of Private Consumption”.
The number of visitors increased 20.1% YoY to 6.28 million in September, INEGI reported. Total expenditures were up 4.5% YoY to US$1.79 billion despite a 13.0% reduction in the average expenditure per visitor to US$285.0.
The Mexican Government signed the “Pacto Contra la Inflación y Carestía” (“PACIC”) 2024-2025, with 19 food producers and 11 distribution companies. Its main goal will be to maintain stable basic basket prices during the next six months at no more than MXN$910, or MXN$129 less than the previous version of the Pact. Companies also agreed not to increase corn flour prices until December 31st, to offer special packages of basic products with a price below the maximum agreed level and support the PACIC campaign.
Secretary of the Economy Marcelo Ebrard said that the final resolution of the US controversy panel against Mexico regarding transgenic corn will take next December 14th. He acknowledged the possibility that Mexico could lose such panel.
CETES auction: 27-day CETES flat at 10.10%; 91-day CETES -14 bps to 10.34%; 182-day CETES -17 bps to 10.36% and 364-day CETES -13 bps to 10.49%.
Download PDF: MIMxMktNov14-2024