MARKETS
Volatile week for the markets. US President elect Donald Trump posted on social media, threatening to apply a 25% tariff on all imports from Mexico and Canada. HR Ratings changed the outlook on Mexico’s sovereign debt to “Negative” and both Moody’s Analytics and S&P lowered their GDP growth forecasts. And so, S&P / BMV IPC slipped for the third consecutive week, declining 0.5% to close at 49,941.27 pts, below the 50,000 pts psychological level. The Mexican peso managed to close stable at MXN$20.43 per USD, after briefly touching MXN$20.78/US$ on Wednesday, recovering following the conversation between Mexico’s President Claudia Sheinbaum and President-elect Trump, which he described as “wonderful” and “productive”. The yield of the Mexican 10-year M-Bono rose 9 bps to 10.1%.
The S&P / BMV IPC’s top stock gainers for the week were: CUERVO * (+8.7%), GFINBUR O (+4.2%) and ORBIA * (+4.2%). The index’s biggest losers were: LACOMER UBC (-5.6%), GFNORTE O (-5.2%) and ALSEA * (-5.0%).
Next week, we expect the following macroeconomic indicators: business confidence, S&P Global manufacturing PMI, unemployment rate, gross fixed investment, auto exports and production.
LISTED COMPANIES
TIENDAS 3B (TBBB)’s 3Q24 revenues were up 29.8% YoY, driven by an 11.6% YoY increase in same-store sales, significantly outpacing the growth in the overall Mexican hard discount grocery retail segment as reported by ANTAD, and the opening of 131 new stores during the quarter. EBITDA grew 54.0% to MXN$68 million with a 73 bps expansion in the EBITDA margin to 4.6% thanks to operational leverage and higher efficiencies. The company reported net profits of MXN$258 million in the current quarter, compared with a MXN$339 million net loss in 3Q23.
GRUPO ELEKTRA has called an ordinary and extraordinary shareholders’ meeting for next December 27th to vote on the delisting of its shares from the Mexican Stock Exchange and the appointment of new Board Directors. The company’s shares have not traded since July, amid a legal dispute between its controlling shareholder and a lender who allegedly took improper control over some of his shares.
GCARSO has reached a binding agreement with Heidelberg Materials Us, Inc., for the sale of Giant Cement Holding, Inc., a subsidiary of Fortaleza Materiales, S.A.P.I. de C.V., for around US$600 million, subject to customary post-closing adjustments. The transaction is expected to take place in 1Q25.
GRUPO BIMBO is seeking more than CAD$2 billion in damages from Maple Leaf and certain of its former senior executives for allegedly making false statements during the Canada Bread sale process. After Bimbo acquired Maple Leaf in 2014, it was fined for CAD$50 million in 2023, over an antitrust investigation from 2016, regarding practices dating back to 2001-2015. Maple Leaf is countersuing for defamation.
Professional baseball team DIABLOS ROJOS DEL MÉXICO plans to list 624,225 shares in the Mexican stock market during the rest of the year under a simplified listing with no public offering. DIABLOS is the current champion of the Mexican baseball league, has won 17 championships and commands the largest audience. During the 12 months ended on September 30th 2024, DIABLOS ROJOS’s revenues increased 71% YoY to MXN$531 million, of which 60% came from admissions and gaming services. Operating profits were down 7.5% to MXN$35.6 million, with a 6.7% margin. Net profits reached MXN$40.1 million, from a MXN$2.5 million loss.
QUALITAS’ written premiums increased 31.2% YoY in 3Q24, which was above the industry’s 28.5% growth. As a result, the company’s market share improved to 32.9%, from 31.9% in 3Q23. QUALITAS’ earned premiums were up 25.9% YoY with which its market share reached 35.9%, compared to 34.9% in 3Q23. Meanwhile, Qualitas held its annual Investor Day, and guided to 2025 revenue growth of 10-12%, ROE of 20%, a combined ratio of 92-94%, and paying out most of earnings in dividends.
PLANIGRUPO launched a tender offer and reciprocal subscription for up to 100% of GRUPO ACOSTA VERDE’s (GAV) shares under the following conditions: (i) an exchange factor of 10.3x PLANIGRUPO shares for each GAV share, equivalent to MXN$183.0310 for each GAV share or (ii) a cash price of MXN$156.00 per GAV share, according to the terms detailed below (the “Offer”). The maximum number of GAV shares that may be exchanged for PLANIGRUPO shares is 46,909,338. In addition, the maximum amount in cash that will be paid for the acquisition of GAV shares is MXN$4.68 billion. Should the demand for cash or PLANIGRUPO shares exceed the established maximum amounts, the surplus will be distributed on a pro rata between cash or shares, as appropriate.
ROTOPLAS will continue reducing emissions through the use of renewable energy in its plants in Mexico. The company already made the transition to 100% renewable energy in two plants in León in the middle of the year, as well as two more in Monterrey, and plans to continue with such migration in all its facilities by the end of this year or during the course of 2025, according to Guillermo Punzo, the company’s sustainability manager.
FIBRA EDUCA announced that the sellers have fulfilled the precedent conditions which enables the Fibra to carry out the acquisition of the second phase of the real estate portfolio, which consists of six properties in the educational sector (one in Mexico City, four in Coahuila and one in the State of Morelos). As a result, FIBRA EDUCA will initiate the regulatory procedures before COFECE to complete this operation.
RLH PROPERTIES has acquired, indirectly through two of its subsidiaries, a 7.23% equity stake in the Fairmont Mayakoba hotel. As a result, RLH is now the indirect owner of 100% of that hotel.
FSHOP raised a MXN$1.93 billion syndicated loan to refinance the outstanding balance of the “La Perla” project’s debt. The interest is 50 bps lower than that of the previous financing.
URBI announced it has received authorization from the CNBV to delist its shares from the MSE. The company is offering to buy the floating shares at MXN$111.88.
OTHER COMPANIES
CITIBANAMEX’s separation into two entities will take place during the first days of December, according to local newswires.
AMAZON MEXICO will hire more than 5,800 temporary employees to face upcoming events such as Black Monday, Cyber Monday, December’s season and “Día de Reyes”.
JOHN DEERE plans to invest up to US$55 million in a new machinery and construction equipment plant in Mexico which will begin operations in 2026.
ZEBRANDS, a household products startup, behind Luuna mattresses, obtained a MXN$1.1 billion syndicated loan from HSBC Mexico and Banco Sabadell Mexico, to buy back shares from Private Equity investors, finance its expansion plans (it expects to open 3 new stores per week during 2025), increase manufacturing capacity by tenfold. Original investors, such as Nazca, are reported to have made 26.7x their investment, an impressive and somewhat rate Mexico VC success story.
A 100 page report sponsored by NU MEXICO made a series of recommendations aimed at increasing Mexico’s financial inclusion to more than 85% in the near term, which include the adoption of instant payment systems to simplify digital transfers between platforms, implementation of alternative identification methods such as biometry, framework flexibilization to incorporate AI and data analysis and implementation of a new financial inclusion policy.
TRADE AND ECONOMICS
HR Ratings lowered the Outlook on Mexico’s sovereign rating to “Negative”, from “Stable”, due to the deterioration in the economic growth forecasts for this year and the next one, as well as the expectation of a slower reduction in the fiscal deficit. HR Ratings ratified its “BBB+“ Credit Rating. The rating agency now expects the Mexican economy to grow 1.4% this year and 1.1% in 2025, from 2.5% and 2.0%, respectively.
Moody’s Analytics lowered its GDP growth forecasts to 0.6% (from 1.3%) in 2025 due to the adverse impact of trade policies to be adopted by US President elect Donald Trump. The agency also expects a 1.6% growth in 2026. S&P Global Ratings also revised down its GDP growth estimates to 1.2% (from 1.5%) in 2025 and 1.9% (from 1.6%) in 2026 due to the expected trade uncertainty generated by Donald Trump’s return to the US Presidency.
With 344 votes in favor and 114 against and no abstentions, the Chamber of Deputies approved the 2025 Income Law, which contemplates MXN$9.3 trillion in fiscal revenues. The Deputies also approved a 2-3% GDP growth rate, a 3.5% inflation and FX rate of MXN$18.50, an average price of US$57.8 per barrel for the Mexican mix and a production platform of 1.89 barrels per day. The bill has been turned over to the Senate.
With 86 votes in favor and 42 against, the Senate approved the reform that eliminates independent regulatory agencies such as INAI, IFT, COFECE, CRE, CNH, Coneval and Mejoredu.
Banco de México published its Quarterly Inflation Report. The institution anticipates a GDP growth of 1.8% (up from 1.5%) in 2024, 1.2% (unchanged) in 2025, and 1.8% in 2026; an inflation rate of 4.7% (from 4.4%) in 2024, 3.0% (unchanged) in 2025 and 3.0% in 2026; and a core inflation rate of 3.7% (from 3.9%) in 2024, 3.1% (unchanged) in 2025 and 3.0% in 2026. “There is uncertainty about the policies that will be implemented in the United States; it would be premature to talk about possible implications, given that we do not have enough information,” said Governor Victoria Rodríguez, during the presentation of the bank’s quarterly inflation report.
Banco de Mexico’s minutes set a dovish tone, which means that a 25 bps reduction in the key interest is likely in the December Meeting. The institution “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”.
Mexico registered a US$371 million trade surplus in October, INEGI reported. This was the first surplus in the last 5 months. Export growth accelerated to 11.2% YoY (oil -24.2% and non-oil +13.5%) to a historically high level of US$57.7 billion, while imports advanced 9.7% (oil -18.3%, non-oil +12.0%, consumer goods +3.1%, intermediate goods +11.6% and capital goods +5.8%) to US$57.3 billion.
The Finance Ministry repurchased MXN$152.4 billion in Cetes, Bondes F, MBonos and Udibonos that matured between 2024 and 2026 and placed debt maturing between 2026 and 2043. The Government’s debt profile improved by 3.43 years while the average cost of debt fell by 61 bps. This was the eight debt refinancing during the current year and the second one during the Sheinbaum administration.
Construction Activity decreased 4.8% MoM in September, based on INEGI’s seasonally adjusted data. Total employees declined 1.1% MoM, working hours 1.7% and average real remuneration 3.7%. According to original data, construction activity was down 22.4% YoY, with total employees falling 1.5%, working hours 4.5% and average real remuneration 0.3%.
Foreign direct investment was up 4.2% YoY to US$3.2 billion in 3Q24, the Economy Ministry reported. However, the 3Q24 figure was substantially lower than the US$5.6 billion in 2Q24 and US$26.9 billion in 1Q24. New investments declined 36.6% YoY to US$511 million.
Mexico will invest MXN$55 billion (US$2.7 billion) to double the size of the Manzanillo seaport by 2030. It will receive the same number of containers as the biggest port in the US—Los Angeles. This would position Manzanillo as one of the world’s top 20 seaports, compared to its current 53rd position.
President Claudia Sheinbaum presented the Regional Economic Development and Nearshoring Council (CADERR) which will be coordinated by Altagracia Gómez and will include important business personalities from different parts of Mexico such as Gina Diez Barroso, Myriam Guadalupe ‘Pita’ de la Vega, Blanca Treviño de la Vega, María Elena Gallego, Concepción Miranda, Eduardo Tricio, José Chapur, Armando Garza Sada, Ana María Macías, Tamara Caballero, Rodrigo Herrera, Antonio del Valle, Raúl Gutiérrez, and Juan Domingo Beckmann.
CETES auction: 28-day CETES -10bps to 9.95%; 91-day CETES -10 bps to 10.00%; 182-day CETES -1 bps to 10.20% and 350-day CETES -29 bps to 10.20%.
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