Economy 27-11-2018

The Mexican stock market falls 4.17% and the peso loses 1.11% due to legislative proposals

The Mexican Stock Exchange (BMV) recorded a sharp drop of 4.17%, a level not observed since March 19, 2014, dragged down by losses in the banking sectors before announcements of new projects in Congress, informed the Banco Base Financial Group.

"The foregoing occurred after, at the close of Friday [November 23], the Labor Party (PT, left) bench in the Chamber of Deputies proposed a bill that seeks the State, and not the Afores, administer the workers' retirement funds (Afores) ", indicates the analysis of the institution in a report to which Sputnik had access.

In the session of November 26, the banking sector suffered the worst losses with falls in Banorte, Banco Bajío and Banco Santander of 12.95%, 8.73% and 6.24%, respectively.

The legislative proposal of the minority party that integrates the coalition of President-elect Andrés Manuel López Obrador includes prohibiting these resources from being invested in the capital market, and on the contrary, promotes investment in development banks, parastatals such as Petróleos Mexicanos. and the Federal Electricity Commission, and federal government debt.

"It is important to mention that this, together with the loss of bonds issued for the construction of the New Mexico International Airport (NAIM) and with the bill that seeks to regulate the charging of bank fees, represents an additional risk for the financial system in Mexico, "the private financial group told its clients.

This climate was reflected in the general loss observed in the rest of the sectors of the Price and Quotation Index.

On the other hand, the Mexican peso ended the session with a depreciation of 1.11% or 22.6 cents, trading around 20.63 pesos per dollar, a new maximum since June and gradually approaching the maximum in the year of 20 , 96 units per dollar.

"The fall in the peso during the session is related to an increase in the perception of risk in Mexico, which reduces the demand for financial instruments denominated in pesos," the bank said.

At the beginning of the week, the yield on 10-year sovereign bonds (M) registered an increase of 14 basis points to 9.21%, reaching a new high since November 2008.

The greater perception of risk coincided with new threats from the US president, Donald Trump, to close the border with Mexico if this country does not curb Central American migrants, "which would have negative repercussions for economic activity in Mexico, as it would slow down the commercial flow ", says the analysis.


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