Bang out the new year: Bolsa, peso make impressive strides in first weeks of 2004.The markets have pleasantly surprised on all fronts since my last installment. Despite the unsurprising failure of President Fox's fiscal reform package, both stocks and the peso have found a second wind in the new year and helped the IPC (1) (InterProcess Communication) The exchange of data between one program and another either within the same computer or over a network. It implies a protocol that guarantees a response to a request. index climb to previously unassailed heights. Throughout January, the Bolsa consistently climbed higher and higher above the 9,000-point mark, while the peso has shown marked strength even as the dollar continues to thrash out thrash v. thrashed, thrash·ing, thrash·es v.tr. 1. To beat with or as if with a flail, especially as a punishment. See Synonyms at beat. 2. a deeper bottom versus the euro. The scenario currently looks far rosier ros·y adj. ros·i·er, ros·i·est 1. a. Having the characteristic pink or red color of a rose. b. Flushed with a healthy glow: rosy cheeks. 2. than it did in mid-December, and this is largely thanks to the strength of American and regional markets. Domestically, the Institutional Revolutionary Party (PRI PRI: see Institutional Revolutionary party. (Primary Rate Interface) An ISDN service that provides 23 64 Kbps B (Bearer) channels and one 64 Kbps D (Data) channel (23B+D), which is equivalent to the 24 channels of a T1 line. ) did its best to rain on the government's New Year parade by failing to back Fox's fiscal reform package--a move that initiated a bout of selling from investors who had bet on a positive resolution to Fox's dream. Surprisingly, the momentum in stocks proved too strong, and the legislative failure provoked only a momentary mo·men·tar·y adj. 1. Lasting for only a moment. 2. Occurring or present at every moment: in momentary fear of being exposed. 3. Short-lived or ephemeral, as a life. stutter stut·ter n. A phonatory or articulatory disorder characterized by difficult enunciation of words with frequent halting and repetition of the initial consonant or syllable. v. To utter with spasmodic repetition or prolongation of sounds. in the relentlessly upward trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. . DON'T CALL IT A COMEBACK The peso also reacted adversely to the political non-occurrence and sunk momentarily to an all-time low of 11.3785 on Nov. 28. However, with a mounting pile of international reserves and an improving economic outlook, the peso sailed back to more tranquil TRANQUIL - 1966. ALGOL-like language with sets and other extensions, for the Illiac IV. "TRANQUIL: A Language for an Array Processing Computer", N.E. Abel et al, Proc SJCC 34 (1969). waters, hitting levels not seen since last summer--around 10.80 to the greenback greenback, in U.S. history, legal tender notes unsecured by specie (coin). In 1862, under the exigencies of the Civil War, the U.S. government first issued legal tender notes (popularly called greenbacks) that were placed on a par with notes backed by specie. . The main reason behind the comeback is the central bank's daily dollar auctions, likely to be around US$45 million in the next quarter, up from a paltry pal·try adj. pal·tri·er, pal·tri·est 1. Lacking in importance or worth. See Synonyms at trivial. 2. Wretched or contemptible. US$6 million in the last quarter of 2003. The dollar auction is designed expressly to keep the exchange rate in check and appears to have become a far more effective tool than the previous corto mechanism. [ILLUSTRATION OMITTED] The brisk exchange rate movements in January led to heavy arbitrer trading on the Bolsa, focusing on blue chips such as Telmex. While Telmex has moved laterally over that period, the runaway success and market driver continues to be sister company America Movil. The wireless concern has been bid up strongly in recent weeks, most likely by investors betting on outstanding fourth-quarter results and a strong year ahead. America Movil has risen 17.8% in the period (with the IPC index up 9.4%) hitting a new high of 17.13 pesos a share. Even more impressive is the stock's performance since August 2002, in which time it has more than tripled in value. Although investors may cash out for profit, this stock is a keeper for the new year as it looks to consolidate its newly acquired operations in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , all under the expert guidance of El Ingeniero Carlos Slim. Looking swiftly at the debt market, the government is also taking advantage of the becalmed be·calm tr.v. be·calmed, be·calm·ing, be·calms 1. To render motionless for lack of wind: "Across the harbor, a small sailing skiff, becalmed near some reeds, caught the breeze again" markets and record low risk factor (calculated as a spread between local and comparable U.S. debt) to bolster the long end of the yield curve by offering more five-year, 10-year and 20-year debt. Six-month Cetes are being offered on a weekly rather than fortnightly fort·night·ly adj. Happening or appearing once in or every two weeks. adv. Once in a fortnight. n. pl. fort·night·lies A publication issued once every two weeks. basis. Inside the walls of Hacienda hacienda also called estancia (Argentina and Uruguay) or fazenda (Brazil) In Latin America, a large landed estate. The hacienda originated in the colonial period and survived into the 20th century. , economists are clearly patting themselves on the back for their implementation of a tight fiscal policy. Inflation for 2003 came in within its boundaries (at 3.98%), interest rates and country risk are close to all-time lows and even the peso is coming into line, or at least showing signs of resilience resilience (r  ·zilˑ·yens),n . The only struggler will be the full-year GDP GDP (guanosine diphosphate): see guanine. figure (likely to be 1-1.5%), which will show Mexico's recovery continues to trail that of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . When we consider that the stock market has put on a staggering 58% since February 2003, a bout of profit-taking looks inevitable in the short-term. With only fourth-quarter results set to guide the market, the only wild card in the pack prior to the next congressional session could be the rating agencies. Any raising of the country's investment grade status would certainly give the Bolsa a new peak to conquer.
Index 31 Dec.2003 NOMINAL REAL (1)
Monthly Accrued Monthly Accrued
Stock Market INDEX
IPC 8,795.28 2.8% 43.6% 2.4% 38.1%
INMEX 490.67 1.4% 46.9% 0.9% 41.3%
Mutual Funds
Equity 2,665.52 2.4% 31.2% 2.0% 26.2%
Debt for Individuals 4,122.57 0.3% 5.4% -0.1% 1.4%
Debt for Corporations 1,612.05 0.4% 5.3% -0.1% 1.3%
Economic Activity
Industrial 3,383.69 4.8% 34.2% 4.3% 29.1%
Retail 11,522.17 0.1% 25.5% -0.3% 20.7%
Non-Financial Services 6,357.99 5.4% 8.8% 5.0% 4.7%
Insurance and Banks 4,147.01 3.2% 23.1% 2.8% 18.4%
Broker Firms 414.03 0.0% 0.0% -0.4% -3.8%
Financial Groups 334.47 0.5% 29.2% 0.1% 24.3%
Sector
Mining 10,390.38 48.2% 165.1% 47.5% 155.0%
Industrials 2,948.19 5.2% 18.5% 4.7% 13.9%
Construction 14,634.66 2.3% 42.6% 1.8% 37.1%
Retail 15,325.10 -0.6% 35.8% -1.0% 30.6%
Communications &
Transportation 36,720.56 1.8% 49.0% 1.4% 43.3%
Services 1,103.31 -1.1% 31.9% -1.5% 26.9%
Holding Companies 3,198.11 6.5% 46.3% 6.1% 40.7%
Index DOLLARS (2)
Monthly Accrued
Stock Market
IPC 3.9% 31.8%
INMEX 2.4% 34.9%
Mutual Funds
Equity 3.5% 20.4%
Debt for Individuals 1.4% -3.3%
Debt for Corporations 1.4% -3.4%
Economic Activity
Industrial 5.9% 23.2%
Retail 1.2% 15.1%
Non-Financial Services 6.5% -0.1%
Insurance and Banks 4.3% 13.0%
Broker Firms 1.0% -8.2%
Financial Groups 1.6% 18.6%
Sector
Mining 49.7% 143.3%
Industrials 6.3% 8.7%
Construction 3.3% 30.9%
Retail 0.5% 24.6%
Communications &
Transportation 2.9% 36.7%
Services -0.1% 21.1%
Holding Companies 7.6% 34.3%
(1) Dec. inflation: 0.43% January-Dec. inflation: 3.98%
(2) Dec. depreciation: -0.9% January-Dec. depreciation: 8.95%
Information provided by AMCILAM economist Jose Antonio Hernandez
Balbuena
Gianluca Baratti works as a stock market analyst at Finamex Casa de Bolsa. [ILLUSTRATION OMITTED] Commentary by Gianluca Baratti |
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