Mexico bourse plans new investment product for energy market

Mon, Jan 19 11:19 AM EST

reuters.com

 

 

MEXICO CITY, Jan 19 (Reuters) - The Mexican stock exchange is planning to launch a product that could allow investment in energy market infrastructure, a senior official at the bourse said on Monday.

 

Jose Manuel Allende, the stock exchange's deputy director general in charge of planning and promotion, said the product would be similar to real estate investment trusts (REITs) and local instruments known as structured equity securities (CKDs), and could allow companies to list infrastructure like pipelines.

 

Allende said at an event in Mexico City the idea was to create a basis for the product in Mexican legislation, which would need the approval of the national banking regulator and the finance ministry. He said he hoped the go-ahead could be granted later this year.

 

According to Allende, the planned product would be like a master limited partnership, a kind of publicly traded limited partnership which does not pay income tax.

 

Mexico's government, which recently abolished a 75-year-old state oil and gas monopoly, hopes that opening up the market to private investors will boost flagging crude output and spur faster growth in Latin America's second-biggest economy.

 

 (Reporting by Cyntia Barrera; Editing by James Dalgleish)

Construction of Santa María Dam to Begin this Year

by Maureen Dietrich
15 Jan 15
mazmessenger.com

Construction of irrigation canals will begin at the same time as construction of the dam.

Ingenieros Civiles Asociados (ICA), the largest construction consortium in Mexico, has signed a contract for 3,989 million pesos with the National Water Commission to begin within the next few months the construction of the Santa María dam in El Rosario. The much anticipated dam will increase agricultural development and supply water for the Centro Integralmente Planeado “Playa Espíritu” tourist resort in southern Sinaloa.

According to information provided by ICA to the Mexican Stock Exchange, the project is expected to be completed by January, 2018.

Fernando Valdez Solano, of the Sinaloa Development Council, commented that ICA will work in association with a contractor specializing in hydraulics.

Personnel from the company have arrived in the area to begin work on the project which has been anticipated for the last three decades.

To avoid conflicts with communities that will be affected by the dam, as occurred when the Picachos Dam was built, Valdez Solano said they have come to an agreement with the Santa María town population including the amount of rent they will pay while waiting for the federal government to come to an agreement and pay the community for the hectares the dam will occupy.

He also pointed out construction of irrigation canals will begin at the same time as construction of the dam.

(from Noroeste)

Mexico Stock Exchange to be Linked to LatAm Bourses

Gabriel Stargardter - Reuters.com
go to original
July 1, 2014

Mexico's stock exchange will be connected to bourses in Chile, Colombia, and Peru by year-end. At the end of last year, the combined valued of the four countries' stock exchanges was $1.1 trillion.

Mexico City, Mexico - Mexico's stock exchange has announced that it will be connected to bourses in Chile, Colombia, and Peru by year-end through the Latin American Integrated Market, or MILA, nearly doubling the size of the bloc.

MILA was formed in 2011 to boost market liquidity within the Pacific Alliance trade group, and the alliance aims to create more business for the financial markets in the region.

"The Pacific Alliance will have in MILA's bourses an effective instrument of economic integration," said Luis Tellez, head of Mexico's bourse.

At the end of last year, the combined valued of the four countries' stock exchanges was $1.1 trillion, Tellez said.

According to the World Federation of Exchanges, Mexico's stock market is nearly as big as those of the three Andean countries combined.

MILA works, for example, by allowing a Colombian investor to buy shares in a Peruvian-listed firm using a broker in Bogota.

Countries maintain regulatory authority over their respective trading, but the ability to make the cross-border purchases increases volumes, a key component to attracting future stock listings by companies inside and outside of the region.

Bolsa Mexicana de Valores (Mexico Stock Exchange)

Experts say MILA should create a "virtuous circle" by lowering exchange costs, raising analyst coverage, and clearing a path for investment to head to smaller companies.

Traders across the region, however, said that hurdles remain in order for MILA to live up to its potential.

"I think the project is still in diapers," said Gerardo Roman, head of stock trading at the Actinver brokerage in Mexico City, highlighting tax, currency, and trading systems as key issues holding MILA back.

Roman added that MILA's success would also depend on the liquidity generated by larger institutional investors, such as Mexico's local pension funds, or "afores," which helped power a record year of stock offerings there in 2013.

The S&P MILA 40 index, which tracks the top 40 issues from the three Andean exchanges, is up more than 4 percent so far this year, while Mexico's IPC index has gained a meager 0.5 percent.

"As a bourse, MILA hasn't brought many benefits, in my opinion," said Daniel Ramos, a trader with Diviso Bolsa in Lima. "I think with Mexico it will be the same."

The announcement was made as the Pacific Alliance summit kicked off in the western Mexican coastal state of Nayarit, near the beach resort of Puerto Vallarta.

The Pacific Alliance, created in 2012, is an economic bloc that includes MILA's members and represents about 35 percent of Latin America's gross domestic product.

Original Story

Banks to Close Thursday and Friday

by Murry Page

15 Apr 14  

mazmessenger.com

 

México’s banks and the Mexican Stock Exchange (BMV) will be closed Thursday, April 17and Friday, April 18.

According to the general provision of the National Banking and Securities Commission (CNBV) México’s banks and stock exchange will reopen Monday, April 21.

However, banks that offer their services in stores and supermarkets will be open to the public during their normal business hours on Monday.

Customers of banks will have available to them telephone banking services, internet banking and 36,000 ATMs across the country, where they can make balance inquiries and cash withdrawals.

(from Azteca Noticias)

April will bring telecom changes

Monday, 10 March 2014

THE NEWS/THE ASSOCIATED PRESS

Thenews.com.mx

Most of the 188 measures that the Federal Telecommunications Institute (Ifetel) has imposed on América Móvil and Grupo Televisa will take effect in April, according to the regulating body’s president.

“A 30-day waiting period applies to almost all of the resolutions,” Gabriel Contreras, president of Ifetel, as the agency is known, said Sunday, according to the news agency Notimex.

The key finding by Ifetel, made last Friday, is that both Televisa, the nation’s most-watched television network, and América Móvil, Carlos Slim’s telecom company, are “preponderant” in the market. That finding gives authorities the right to impose restrictions on the two as part of an effort to open up room more competition in the Mexican telephone and television sectors.

In addition, regulators approved plans to open bidding for two new nationwide TV channels, to foment more competition in an industry where the Televisa network holds about 70 percent of non-cable viewership. Televisa bills itself as the largest media outlet in the Spanish-speaking world.

Ifetel said it is working on the bidding guidelines for the new networks. Currently, Televisa’s only broadcast TV competitors are several government educational channels and the smaller TV Azteca, a former government network privatized in the 1990s.

Paradoxically for a move aimed at ending market concentration, the decision could open the way for Slim to get into television, according to a report by The Associated Press. Slim’s América Móvil company controls about a 70 percent market share in cellular telephones and 80 percent of land lines, but has yet to establish a presence in television.

The restrictions could change the media playing field significantly.

Televisa said the regulators’ decision requires it to “make its broadcasting infrastructure available to third parties on a non-discriminatory and non-exclusive basis.”

Regulators said Televisa will be barred from buying exclusive rights to broadcast “programs with unique characteristics that in the past have delivered large audiences on a national or regional basis, such as professional soccer league playoffs, Mexican national team matches, FIFA World Cup finals and the Olympic Games,” according to the Televisa statement.

Slim’s Grupo Carso said in a statement to the Mexican stock exchange that authorities have informed them that America Móvil will have to share its infrastructure and stop charging roaming for national calls.

Rogelio Bustamante, a telecommunication expert at the Technological University of Monterrey (ITESM), told The Associated Press that “there is going to be a change in telecom contents and services in Mexico” as a result of the new rules. “We are entering a new phase of more competition.”

Televisa said it was still studying the regulatory decision, which was more than 600-pages long.

The company will have to publish its advertising rates, which have been confidential and highly variable.

Agustín Ramírez, president of the nonprofit Mexican Association for the Right to Information, called the new rules “an important step in regulating highly concentrated markets.”

“The other beneficiary here will obviously be advertising markets, he said. Those markets will “explode” because of new, transparent policies in selling ad time.

Televisa has been slammed by critics for churning out a decades-long stream of often smarmy soap operas that are nonetheless popular across the world.

That is not likely to change for the moment.

“Simply issuing bidding rules for new television channels, to create more competitors, will not automatically mean better content for audiences,” said Ramírez.

Banks to close on Monday

by Murry Page on 31 Jan 14  
mazmessenger.com
 

México’s banks and the Mexican Stock Exchange (BMV) will be closed next Monday, February 3^rd, in recognition of Constitution Day.

According to the general provision of the National Banking and Securities Commission (CNBV) establishing legal holidays in the financial sector, the institutions will close on Monday and reopen for business on Tuesday, February 4^th.

However, banks that offer their services in stores and supermarkets will be open to the public during their normal business hours on Monday.

Customers of banks will have available to them telephone banking services, internet banking and 36,000 ATMs across the country, where they can make balance inquiries and cash withdrawals.

(from El Economista)

5 Stocks For Mexico's Historic Energy Reform

seekingalpha.com

Jan. 21, 2014 7:12 PM ET 

by: Zacks Investment Research  

By Tracey Ryniec


2013 was a landmark year south of the border. On Dec 23, President Enrique Pena Nieto signed into law legislation, which required changing the Mexican constitution, to open Mexico's energy market to foreign investment. Mexico is the world's 10th largest oil producer. Reforming Mexico's energy industry has been at the top of the agenda by Mexican presidents over the last several decades. Many didn't think it could ever be done.

For 75 years, Mexico's energy market has been dominated by one government-run player, Petroleos Mexicanos, otherwise known as Pemex. The changes to the law are groundbreaking and are expected to bring up to $20 billion in direct foreign investment over the next 2 years.

What Happens Now?

Energy reform will happen in two parts. The first was actually changing the constitution and getting the new law passed. That has been completed. But now the hard part of implementation will take place. Under the law, new implementing laws must be in place within 120 days of the passage of the legislation on Dec 23. These laws will lay out the particulars such as which parts of the country will be available for development and how the contract and licensing procedures will work.

Game Changing Legislation

Pemex is a government-run company which many oil analysts have said has been left to stagnate. It hasn't developed the latest technologies and is not very competitive in the global energy market. Under the new legislation, Pemex would become more like a private entity. Within 2 years, it will be operating as a regular business, which means it will have to be profitable and pay its bills.

It will be pitted against the private sector companies for business, although Pemex will be given the right of first refusal on the first round of projects which will take place in the first 90 days of implementation. Pemex then will have 3 to 5 years to develop those projects. In many countries that have opened up their energy sectors to foreign investment, foreign companies often work in partnership with the government run oil industry. That will apparently NOT be the case in Mexico.

Foreign companies will be bidding on licenses and contracts directly, with proceeds to be deposited into a newly created sovereign fund which will then manage the oil revenue. For oil and gas exploration, Mexico will retain the rights to the commodities under the ground. However, on the downstream side, the Secretary of the Energy can directly award licenses to private companies for refining, pipelines, petrochemicals, bulk stations and gas stations. For the first time ever, you may see gas stations other than Pemex around Mexico.

Foreign Investment Bump

While there is the obvious direct beneficiaries of the law, i.e. the foreign oil companies, others could see benefits during the infrastructure build-out, such as railroads and airports. As the Mexican economy improves, it could trickle down to retailers, convenience and grocery stores, and homebuilders. The Mexican government expects energy reform to impact GDP by 1% as soon as 2018. You can see why many Mexico-watchers are extremely excited about what could develop and Mexico's future.

How Quickly Will it Happen?

While the clock is ticking on the 120 day window for implementation laws to be put into place, no one expects the energy companies to be arriving en mass any time soon. The most hopeful believe there could be some investment by the second half of 2014, but others believe the bulk of the contracts will be awarded and begin in 2015. Opportunities await in the offshore fields and in places where you'd least expect it such as the Eagle Ford Shale in Southern Texas, which has no knowledge of international boundaries and extends south of the Rio Grande into Mexican territory.

5 Ways to Play Mexico's Energy Renaissance

There's no way of knowing which companies would be most interested in investing in Mexico but we can make some educated guesses. Basically, we can assume that most of the world's largest oil companies will be interested. There are few "new" areas to drill that have proven reserves.

For instance, on Jan 14, Italy's largest oil company Eni S.p.A., wasted no time in getting into the game. It announced it had inaugurated a representative office in Mexico City and was entering into discussions with Pemex. But there are also a lot of smaller, independent North American explorers who might be interested in going south of the border. But which ones?

The following are some of the global energy companies I thought could find themselves bidding on Mexican contracts based on their company profiles and past investment behavior.

But, remember, nothing is a done deal until the ink is dry.

1. ExxonMobil (XOM)
2. Eni S.p.A. (E)
3. Gran Tierra Energy (GTE)
4. EOG Resources (EOG)
5. Anadarko (APC)

1. ExxonMobil

Big Oil, including Exxon and Chevron (CVX), is especially suited for entering the Mexican market given their large international operations. Exxon may have a leg up on some of its competitors simply because it has a history of doing business in Mexico through its chemical division.

Surprisingly, it already has 250 employees in the country. It operates a lubricant blending plant in Vallejo and a chemical terminal in the port of Tuxpan. It also has offices in Mexico City.

Zacks Rank #3 (Hold)
Forward P/E = 12.6
2014 Expected Earnings Growth = 6%



2. Eni S.p.A.

Eni is an Italian integrated oil company with a market cap of $84 billion. It already has operations in places such as Libya, Nigeria, Mozambique, Congo and Vietnam. It is used to operating in all kinds of political and geographic environments.

By setting up an office in Mexico City so quickly, it is clearly already signaling that it wishes to be a player in the energy renaissance.

Zacks Rank #2 (Buy)
Forward P/E = 9.5
2014 Expected Earnings Growth = 36.7%


3. Gran Tierra Energy

Gran Tierra is a Canadian-based mid-cap independent explorer and producer with interests in Colombia, Argentina, Peru and Brazil. Geographically, it might make sense for it to make a play for projects in Mexico.

Zacks Rank #3 (Hold)
Forward P/E = 10.7
2014 Expected Earnings Growth = 3.7%



4. EOG Resources

EOG is a Texas-based large cap independent explorer and producer of oil and natural gas. While it has a smattering of international interests, including in Argentina and Trinidad & Tobago, its main focus is on the United States.

So why would it have an interest in Mexico?

One of its large projects is in the Eagle Ford Shale region of southern Texas. This area straddles the Texas/Mexico border. The Eagle Ford Shale doesn't actually know the boundary so there will be opportunities on the Mexico side. Many oil analysts consider EOG to be the best situated to take advantage.

Zacks Rank #3 (Hold)
Forward P/E = 18.4
2014 Expected Earnings Growth = 12.7%



5. Anadarko Petroleum

Some companies will be attracted to Mexico's offshore possibilities in the Gulf of Mexico. Will one of those be Anadarko?

This big cap independent explorer and producer is already one of the largest deep-water producers in the Gulf; in United States territory, of course. It wouldn't take much to transfer that expertise to Mexican blocks.

Zacks Rank #3 (Hold)
Forward P/E = 15.3
2014 Expected Earnings Growth = 23.4%




The Big Story of 2014

Mexico's energy reforms will unfold throughout 2014. It won't be a fast process. But if done right, it has the possibility to take the Mexican economy to the next level. Investors should be looking at companies that are positioned to cash in.

Misconceptions about Mexico.

November 27th, 2012

08:55 AM ET

By Ravi Agrawal, CNN

Here’s some trivia. Which of these countries has the highest average income: India, China, Brazil or Mexico? If you guessed Brazil, you’d be wrong. And if you guessed India or China, you’d be way off: even if you combine the incomes of the average Indian and Chinese you wouldn’t reach the $15,000 annual purchasing power of the average Mexican.

These numbers don’t fit with many people’s perception of America’s southern neighbor. Mexico, you see, has a PR problem. A quick Google search for news from Mexico throws up a set of results that usually includes the words violence, drugs, cartels, and migrants (or the 2010 oil spill in the Gulf of Mexico). But it’s not just the international media that seems to have it in for Mexico’s reputation. Mexicans themselves seem woebegone. A recent Pew survey found that only a third of Mexicans think they have a good national economic situation. Compare that with half of Indians, 65 percent of Brazilians, and 83 percent of Chinese.

Or let’s go back to average citizens: 52 percent of Mexicans think they have a good personal economic situation, but for Indians, Chinese, and Brazilians, those numbers rise to 64 percent, 69 percent, and 75 percent respectively – and that’s despite the fact that in purchasing power terms, Mexicans actually earn more per capita than citizens of all three of those countries. And, unlike the others, Mexico’s growth rate is actually rising.

Indeed, Mexico’s economy has a number of strengths. It is the 14^th largest in the world. If you take into account purchasing power, it is the 11^th largest economy – larger than Canada, Turkey, and Indonesia. It is projected to grow 4 percent this year, and even faster in the coming decade, a rate that the financial services firm Nomura says will lead to Mexico overtaking Brazil as Latin America’s biggest economy within 10 years, despite the fact that Brazil’s economy is currently twice as large.

Still, there is a weakness in Mexico’s growth, as I saw for myself when I was there last month: the money hasn’t been trickling down. According to the Organization of Economic Cooperation and Development, Mexico has the highest rate of poverty among the group’s 34 member nations. If you consider inequality, the OECD ranks it the second most unequal, with only Chile more unequal.

So although the headline numbers might surprise, Mexico presents something of a mixed bag. Yet this hasn’t deterred investors taking a growing interest in this Latin-but-North American country. In a special report on investing in Mexico, the Financial Times went as far as to call its macroeconomy “virtually bulletproof.”

Move over BRICs – Brazil, Russia, India, China – it’s time for the MISTs – Mexico, Indonesia, South Korea, Turkey.

Part of Mexico’s appeal to investors is tied into what I think may be the country’s key weakness: inequality. You see, at the lowest-end, labor remains cheap. The Economist points out that in 2003, Mexican pay was three times China’s rates; now it is only 20 percent higher. So Mexican manufacturing is poised for a boom.

And while in the past few years Mexico banked on its proximity to the U.S. (lower transport costs) and trade deals like NAFTA to compete with China, it will now be able to manufacture and price products at an advantage.

The big question, of course, is whether the export dollars will trickle down. But making this happen will require significant market reforms. In his recent book "Breakout Nations: In Pursuit of the Next Economic Miracles," Morgan Stanley’s Ruchir Sharma points out how the top 10 Mexican families account for more than a third of the country’s stock market value – an almost unheard of number. “Private cartels produce about 40 percent of the goods that Mexicans consume and charge prices that are 30 percent higher than international averages,” he writes. “Phones, services, soft drinks, and many foodstuffs cost more in Mexico than in the United States.”

One thing is clear – Mexico is not the war-torn wasteland it is often made out to be. Its people have a glorious history, and a hopeful future. This isn’t to say that Mexico is destined to be the next investment hotspot – that’s far too simplistic a way of looking at this. Instead, the numbers suggest the truth is somewhere in between. Mexico has enormous capacity to surprise on the economic stage. But to really shine, it needs to work on developing a vibrant – and bigger – middle class.

Meade optimistic on GDP forecast

Wednesday, 06 November 2013 00:10 
THE NEWS


The Mexican government hopes that the country’s economy will see a “rapid improvement” over the course of the next year, with a 3 to 4 percent increase in the Gross Domestic Product (GDP), Foreign Relations Secretary José Antonio Meade said during a visit to France on Tuesday.

Mexico began the year with initial expectations of 3.1 percent annual growth, but first quarter growth only managed to reach 0.8 percent, which then rose only slightly in the second quarter.

Meade said that he is basing his optimistic prediction on the positive effects of a young population, important energy resources and government efforts to ensure a balanced budget and healthy financial system.

The current weakness of the Mexican economy, he added, can be blamed on weak worldwide growth, especially given that 80 percent of the country’s exports go to the United States. To diversify its export markets, Meade said that Mexico has turned to the south, as seen in its support for the Pacific Alliance, a proposed free trade area that would incorporate Mexico, Colombia, Chile and Peru. He added that negotiations on the Pacific Alliance have almost wrapped up, and that it’s expected that the final text of the treaty will be signed in the coming weeks.

“If Mexico manages to promote foreign trade and reform its economy, my country could be the world’s 7th largest economy in 2050,” Meade said.

According to Meade, President Peña Nieto’s reform agenda aims to stimulate investment in Mexico.

Mexico bourse sees up to nine more stock offerings this year

Mexico's stock exchange Chairman Luis Tellez talks during an interview at the Reuters Global Exchanges and Trading Summit in Mexico City, April 5, 2010.

Credit: Reuters/Henry Romero

 

By Elinor Comlay and Gabriel Stargardter

MEXICO CITY | Mon Sep 30, 2013 4:58pm EDT


 

MEXICO CITY (Reuters) - Mexico's stock exchange, which is experiencing a record year, expects up to five more stock offerings in 2013 on top of four already in the works, Chief Executive Luis Tellez said on Monday.
"Approximately three companies have confirmed confidentially that they want to list," Tellez told Reuters in an interview. "There will probably be one or two more, but three have already confirmed."

The stock exchange is currently working on applications from dairy producer Lala, investment bank Banco Interacciones, hotel group Grupo Hotelero Santa Fe and real estate investment trust, or FIBRA, Grupo Danhos, according to the companies or to filings with the stock exchange.

Mexican FIBRAs and companies including airline Volaris (VOLARA.MX) and gas company IEnova (IENOVA.MX) have raised almost $10 billion through 15 initial public offerings and follow-on offerings this year, an all-time record for Latin America's second-biggest economy.

Tellez declined to say what companies filed confidential applications.

OUTLOOK

Mexican companies have raised a record amount of money in the equity market this year even amid an economic slowdown and concerns over U.S. monetary policy that have led to recent routs in emerging market stocks.
"The fundamentals in Mexico are very strong," said Tellez, noting that Mexico's stock market is down only 3 percent year-to-date in dollar terms, compared to much larger drops in other countries.

"What's important is that companies see growth opportunities and they want to have a capital base and a better debt-to-equity ratio with which to expand," he added. "I have a positive view on Mexico's economy, as do the companies that are listing and as does the market, which is buying these companies."

Since taking office last December, Mexican President Enrique Pena Nieto has proposed a slew of reforms to tackle the lack of competition in Mexico's telecom and energy sectors, as well as a tax overhaul that will introduce a capital gains tax, among other measures aimed at boosting the country's coffers.

Tellez said he does not expect the capital gains tax to crimp the growth of Mexico's equity market, noting, "It's not in any way an inhibitory tax, it's a tax that can be paid perfectly well."

(Reporting by Elinor Comlay and Gabriel Stargardter; Editing by Bob Burgdorfer)