Weekly Mexico Market Monitor

septiembre 29, 2023
4:29 pm

Weekly Mexico Market Monitor

Friday AM, September 29, 2023

MARKETS 

The FTSE-BIVA index closed on September 28 at 1,064.16 down slightly from its September 21 close at 1,071.51.

The MXN/USD exchange rate closed at 17.56 pesos to the dollar on September 28, weaker than its close of 17.23 pesos on September 21.

The Mexican 10-year bond (2031) closed on Thursday with a yield of 9.943%, slightly up from a yield of 9.759% on September 21.

The FTSE-BIVA Top Stock Gainers for the week were: SIMEC (+5.66%), ALFA (+4.59%) and SANTANDER (+4.09%) and the Biggest Losers were: VOLARIS (-12.44%), SITES (-9.27%) and CARSO (-6.35%).

CORPORATE & MARKET NEWS 

José Antonio Fernández Garza-Lagüera will take over as the head of FEMSA‘s retail business – the key division that includes OXXO and Valora stores in Europe, as well as pharmacies and gas stations, among others. The move suggests he may be the next Group CEO, eventually replacing his father who re-took the job while remaining chairman after the untimely death of former CEO Daniel Rodriguez. As a result, Father and Son are now Group Chairman, Group CEO and Key Operating CEO. JAF G-L will be replaced as Head of Digital by Juan Carlos Guillermety, formerly of Nubank Mexico. Armando Garza Sada will step down as Chairman of Grupo Alfa as of next year’s Annual Meeting and will be replaced by Álvaro Fernández Garza, who will also retain his position as CEO.

Lamosa, a Mexican company that manufactures and sells coatings and adhesives for the construction industry, is buying Baldocer, a Spanish ceramics company. The transaction amounts to at least €425 million (to be paid in two installments), which Lamosa will finance mainly through debt.

Xusheng will invest US $350 million to develop a plant in Saltillo. It is a Chinese company that manufactures aluminum alloy parts for systems such as transmissions, electric vehicle batteries and suspension systems, and its clients include Tesla, ZF Group, Bosch, BMW, and Mercedes-Benz.

Aleatica will be delisting after 99.6% of minority investors accepted its tender offer. IFM Investors, the controller, now owns 99.94% stake in Aleatica, way above the threshold to leave the stock market.

Talos Energy announced the closing of the sale of a 49.9% interest in Talos Mexico to Zamajal, S. A. de C.V., a wholly-owned subsidiary of Grupo Carso. The transaction resulted in an immediate cash exchange of US $74.85 million, and US $49.9 million in additional financing owed from the first oil production from the Zama oil field for a total transaction of US $124.75 million. Talos Mexico owns a 17.4% stake in the Zama mega oil field.

Banco Compartamos, the Mexican subsidiary of the financial company Gentera, obtained the 3 billion pesos (US $169.6 million) it was seeking with a long-term bond on the Bolsa Institucional de Valores (BIVA).

Albo, the Mexican FinTech, raised US $40 million in investment in a round led by Morpheus Ventures (Los Angeles), in which Valar Ventures and Nazca, among others, also participated.

Cemex is acquiring Kiesel, a company specializing in mortars and adhesives for the construction industry. The German company also operates in France, Poland and the Czech Republic.

Grupo Mifel, a financial institution that provides banking and credit services in Mexico, is analyzing an IPO in the second half of 2024, according to Daniel Becker Feldman, Chairman and CEO.

The Korean company HIHO Wheel invested US $60 million in the first phase of its new aluminum wheel manufacturing plant in Guanajuato. It plans to invest an additional US $40 million in a second phase by 2025.

POLITICS 

A series of discussions and actions around increasing migration at the border and within Latin America, occurred this week. In the north, it was reported that last week over 9,000 asylum seekers crossed from Mexico to Eagle Pass, Texas. In the south, Mexico dispersed large groups of migrants on the Mexican side of the border with Guatemala, moving over 8,000 people to other parts of Chiapas along with the states of Veracruz and Tabasco.

In the lithium sector, it became known that the General Director of Mines is attempting to annul nine concessions previously granted to Ganfeng Lithium, citing the failure to meet minimum investment requirements but more likely related to the lithium nationalization of new concessions. However, the head of the mining chamber Jaime Gutierrez stated that ‘I do not believe it is possible to cancel concessions under the law’.

TRADE & ECONOMICS 

The Bank of Mexico unanimously kept interest rates at 11.25% for the fourth time, after a long hiking cycle in May. Banxico forecasts a rise in headline and core inflation for 2023 and 2024, adjusting its YE23 prediction from 4.6% to 4.7% and YE24 from 3.1% to 3.4%. Core inflation estimates for YE23 moved from 5.1% to 5.3% and YE24 from 3.1% to 3.3%.

Mexico’s trade deficit was a narrow $1.4bn in August. Exports totaled US $52.36 billion in August, an annual increase of 3.8% and the third highest in history, according to Inegi and the Bank of Mexico. This was driven by a 4.3% increase in non-oil exports, offsetting a fall in oil exports by 4.6%. Imports reached US $53.736 billion, a contraction of 4.3% compared to the same month of 2022 – the fourth drop in the last five months.

Mexico’s unemployment rate, measured as a percentage of the economically active population (EAP), fell from 2.9% in July to 2.7% in August, according to seasonally adjusted figures from Inegi. With this, the country’s unemployment rate recorded its second decrease in the last three months, returning to its lowest level since records have been kept, which it first reached in June of this year.

Moody’s Investors Service estimated this week that Mexican companies and the Mexican government have so far this year made investment announcements totaling US $40 billion dollars, related to nearshoring. The experts said new investments associated with nearshoring increased versus 2022 when they amounted to between US $12 billion and US $19 billion.