Reuters
barrons.comBy Dimitra DeFotis
The HSBC Mexico PMI index rose to 56.6 in January, the strongest measure since December 2012.
The Mexico PMI was 55.3 in December, and the survey of showed strengthening production volumes and job creation. Bill Adams, senior international economist for PNC Financial Services Group had this reaction: Adams is bullish:
Oil revenue accounts for about a third of Mexico’s fiscal revenue, and the government is planning on lower oil prices for longer. Also on Jan. 29, Mexico Treasury Secretary Luis Videgaray announced a cut in spending of around 0.7% of GDP (124.3 billion pesos). State-owned companies Pemex and CFE will cut spending by MX62 billion and MX10 billion respectively, and the federal government will reduce the remaining MX52.3 billion, report Daniel Kerner and Carlos Peterson of Eurasia Group. Two projects cancelled or suspended: the trans-peninsular train in the state of Yucatan and the high-speed train from Mexico City to Queretaro. Kerner and Peterson write:
The iShares MSCI Mexico Capped ETF (EWW) is up 1.6%, while the iShares Latin America 40 ETF (ILF) is up more than 2% and the Vanguard FTSE Emerging Markets ETF (VWO) is up 1.5%.
Shares of Mexico telecom player America Movil (AMX) and media name Grupo Televisa (TV) are each up about 0.8%. Shares of Coca-Cola Femsa (KOF) are up 2.5% today.
The Mexico PMI was 55.3 in December, and the survey of showed strengthening production volumes and job creation. Bill Adams, senior international economist for PNC Financial Services Group had this reaction: Adams is bullish:
“With oil prices down and the peso weaker, Mexico’s manufacturing renaissance is picking up a notch. A strengthening manufacturing sector should offset the drag on real GDP growth from lower oil prices, although oil still poses downside risk to Mexican fiscal revenues in 2015. Accelerating manufacturing growth should help the Bank of Mexico follow through on ‘strengthening the macroeconomic framework’ in 2015, the language it used in its Jan. 29 monetary decision to allude to a rate hike later this year.”
Oil revenue accounts for about a third of Mexico’s fiscal revenue, and the government is planning on lower oil prices for longer. Also on Jan. 29, Mexico Treasury Secretary Luis Videgaray announced a cut in spending of around 0.7% of GDP (124.3 billion pesos). State-owned companies Pemex and CFE will cut spending by MX62 billion and MX10 billion respectively, and the federal government will reduce the remaining MX52.3 billion, report Daniel Kerner and Carlos Peterson of Eurasia Group. Two projects cancelled or suspended: the trans-peninsular train in the state of Yucatan and the high-speed train from Mexico City to Queretaro. Kerner and Peterson write:
“The government will probably pay a political cost if growth suffers in 2015, something that is very likely, but most probably this will not alter the midterm elections or political equilibrium too much. The government seems to be betting on private investment driven by the swift implementation of the reform agenda, especially the energy reform, as well as the recovery in the U.S. economy, to eventually shift expectations and consolidate the economic recovery.”
The iShares MSCI Mexico Capped ETF (EWW) is up 1.6%, while the iShares Latin America 40 ETF (ILF) is up more than 2% and the Vanguard FTSE Emerging Markets ETF (VWO) is up 1.5%.
Shares of Mexico telecom player America Movil (AMX) and media name Grupo Televisa (TV) are each up about 0.8%. Shares of Coca-Cola Femsa (KOF) are up 2.5% today.
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