The arrival of Andrés Manuel López Obrador (AMLO) to the presidency of Mexico has puzzled the market. During his first hundred days of government, AMLO has made an effort to approach the business leaders of the country and promised not to make profound changes to the productive system; but in that short period it has canceled a mega investment of some 11,400 million euros to build a new airport in Mexico City – where FCC and Acciona participate – and suspended the holding of public auctions to deliver contracts to private oil exploration and production companies , two strategic and long-term projects that were approved during the previous administration of Booklet Template Nieto (2012-2018). it has already caused a 52% collapse of foreign direct investment (FDI) between the first and second half of 2018. AMLO won the elections on July 1 and was not invested until December 1. However, the election of the Socialist made that 21.47 billion dollars that Mexico managed to capture in the first half of 2018, will only receive 10,133 million from July to December.
“The problem is that it gets a lot of autogoles because one day says one thing and the next the other,” says Jorge Sánchez Tello, an economist at the Foundation for Financial Studies (Fundef), a “think tank” to explain the volatility that provokes the president. Sánchez Tello, however, sees positive signs because AMLO has not mentioned anything about “possible expropriations”, which some feared, and believes that over the months it will tend to give more certainty to attract er more IED. “He wants to achieve a growth of 4% of GDP this year and, for that, he knows that he needs foreign investment,” he says.
Rating agencies, for now, have shown no mercy to Booklet Template. Since its victory on July 1, Fitch and S & P have revised their prospects from stable to negative in Mexico and the rating of both to the debt is BBB +, two steps above the junk bond. On the other hand, state oil company Pemex was downgraded to BBB- by Fitch, just one step away from the junk bond, a rating that would be a bomb for the entire Mexican economy. “If Pemex loses the degree of investment, Mexico runs the risk of entering into economic crisis because the financing costs would skyrocket,” says Sánchez Tello.