Institutional investors in Mexico are mostly planning to sit on the sidelines this year, their risk appetite constrained by concerns over the direction of politics under President Andrés Manuel López Obrador, according to a new poll.
But just over a quarter of participants nonetheless thought the current situation spelt opportunity: 29 per cent expected to increase their Mexican exposure moderately, the same proportion as expected to trim their positions.
The first bi-monthly survey by pollsters Buendía y Laredo for Credit Suisse, found 51 per cent of the 94 participating investors based in Mexico and internationally thought it was a “bad moment” to add to risk positions and 39 per cent expected the Mexican assets in their portfolio to remain unchanged over the next 12 months.
Global financial volatility and Mexico’s economic outlook were also concerns, according to the survey, which echoed the findings of the Bank of Mexico’s monthly survey of market players.
For investors in Pemex, the state oil company, the outlook was bleak: 60 per cent expected one or more downgrades, following Fitch Ratings’ move last month to put Pemex one notch above junk.
But the survey found 27 per cent of respondents considered that as of late January, it was a good moment to add to exposure to assets in Mexico. Just over a fifth, 22 per cent, were unsure.
Participants were split roughly equally on prospects for the stock market’s performance relative to the Mexican peso, with 32 per cent seeing it higher or much higher, the same amount expecting no change and 35 per cent expecting it to be lower or much lower.
Three-quarters of participants thought the economy — which slowed to 2 per cent growth last year from 2.1 per cent in 2017, according to the latest official data — was worse or much worse than a year ago.
The same proportion also thought recent petrol shortages in Mexico could shave up to 0.49 per cent from domestic growth. Only 15 per cent saw no impact on growth from the measure, sparked by Mr López Obrador’s closure of pipelines to crack down on fuel theft.
The survey found 51 per cent of investors saw uncertainty about Mexico’s political outlook as the main issue that could undermine the return on their investments.
Despite the expected Pemex downgrades, however, 76 per cent of respondents thought Mexico’s sovereign rating was safe.
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