Summer doldrums awakened: Mexican capital markets catch sight of future growth.What happened? As many market players were tanning tanning, process by which skins and hides are converted into leather. Vegetable tanning, a method requiring more than a month even with modern machinery and tanning liquors, employs tannin; its use is shown in Egyptian tomb paintings dating from 3000 B.C. in Acapulco or at the Hamptons, the Mexican Bolsa, a market that seemed to be suffering a sunburn sunburn, inflammation of the skin caused by actinic rays from the sun or artificial sources. Moderate exposure to ultraviolet radiation is followed by a red blush, but severe exposure may result in blisters, pain, and constitutional symptoms. itself suddenly found new life--blasting 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. through the coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. 10,000 mark and reaching as high as 10,700 points at the time of this writing. At the beginning of August, market sentiment Market Sentiment The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of the securities. Notes: For example, rising prices would indicate a bullish market sentiment. on the Bolsa was both apathetic--normal for late summer markets--and edgy. High oil prices--though positive for Mexico's revenue base--were causing nervousness in world markets. The shadow of terrorists hovered over events such as the Olympics and the upcoming Republican convention and a growing concern that U.S. economic expectations were not being met resulted in understandable nervousness for Mexican growth prospects. Additionally, angry throngs of marching citizens protesting President Fox's policies didn't help market sentiment either. In fact 'what happened' was a strong vote of confidence for the Mexican growth story. The market surge willfully willfully adv. referring to doing something intentionally, purposefully and stubbornly. Examples: "He drove the car willfully into the crowd on the sidewalk." "She willfully left the dangerous substances on the property." (See: willful) ignored a nervous global environment. The 10,000-point mark on the IPC did not cause trepidation trepidation /trep·i·da·tion/ (trep?i-da´shun) 1. tremor. 2. nervous anxiety and fear.trep´idant trep·i·da·tion n. 1. An involuntary trembling or quivering. among traders as they produced an 8-percent rally over the past three weeks. Many traders pointed out the sharp drop in oil futures from summer highs greatly helped spark this equity rally. The IPC index is up 21 percent in the year to date with American Movil (AMX AMX American Motors Experimental AMX Aeromexico Aerovias de Mexico (ICAO code) AMX Air Mobility Express AMX Amberjacks (FAO fish species code) AMX Alabama Motor eXpress ) up more than 35 percent, Televisa (TV) shares have risen over 19 percent and housing stock GEO has returned over 28 percent to investors this year. The market though still offers value. Hopefully, with a stable market environment throughout the remainder of the year, many under-performers should adjust upwards. For example, Cemex (CX), up just over 8 percent this year, announced this month they expected a stronger than projected third-quarter financial report with revenues reaching US$ 2 billion. So, where does the market go from here? "Probably sideways for a bit," predicted a local trader. "The market will suffer some healthy profit taking, but if the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance breaks 10,370 points, then I think Mexican equities will continue their move toward 11,000 on the IPC." DATA SUGGESTS STRONG GROWTH In August, the Mexican government released its second-quarter GDP GDP (guanosine diphosphate): see guanine. figure of 3.9 percent. While most analysts were not surprised by the growth registered here, it did go a long way toward reminding cautious investors that the 'Mexico Story' remains intact for 2004. Growth prospects were further backed by a government economic activity figure for the month of June revealing a 5.1-percent rate of growth--higher than expectations. Finally, in early September, Finance Secretary Francisco Gil Diaz predicted 4-percent GDP for 2004, specifically identifying consumer demand, investments and manufacturing as the main areas of growth. One important observation gleaned from recent data points toward a Mexican export sector that continues to grow in spite of a volatile U.S. manufacturing trend. This, coupled with a Mexican government report revealing a 9.2-percent rise in gross fixed investment (machinery and construction projects) for June, provides confirmation that, despite election year jitters jitters 'Butterflies' Psychology An episode of nervousness or anxiety that often precedes a public event; jitters is a type of performance anxiety which may affect actors in a stage production–stage fright or soloist musicians; it may respond to anxiolytics in 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. and a seemingly constant state of global insecurity, the Mexican economy continues upon its current stable path of growth. Remittances
Remittances are transfers of money by foreign workers to their home countries. from Mexican citizens residing in the United States increased by 25.1 percent (US$9.373 billion) between January and July, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Bank of Mexico The Bank of Mexico (Spanish: Banco de México), abbreviated BdeM or Banxico, is Mexico's central bank and lender of last resort. Banco de México is autonomous in exercising its functions. . Again a pleasant surprise for investors. Lastly, in respect to future growth, a free trade agreement with Japan was signed this month. This treaty, which should benefit the agricultural sector, took more than two years to negotiate, but ultimately it should lead to more than US$1.6 billion of Japanese investment over the next 10 years. On the corporate front, several company announcements confirmed bullish business sentiment for the rest of 2004 and 2005. Early this month, Organizacion Soriana, the feisty retail group, announced they would invest US$110 million to open 11 more stores in 2004. Corporacion GEO, the homebuilder, announced a deal with BBVA-Bancomer and Banco Azteca Banco Azteca a Grupo Salinas company. Banco Azteca has more than 1,500 branches throughout Mexico and other countries in Latin America and is already among the two largest banks in Mexico in terms of coverage. With more than 5. in which the two banks will initially facilitate 2 billion pesos in housing loans to GEO customers. Finally, the most important corporate announcement of the past few weeks was the discovery of significant oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . Pemex indicated the reserves could contain more than 54 billion new barrels, potentially putting Mexico in the same league as Saudia Arabia in terms of discovered reserves. [GRAPHIC OMITTED]
Index 31 Ago. 2004 NOMINAL
Monthly Accrued
Stock Market INDEX
IPC 10,264.32 1.5% 16.7%
INMEX 584.68 1.7% 19.2%
Mutual Funds
Equity 2,977.55 0.9% 11.7%
Debt for Individuals 4,232.21 0.5% 2.7%
Debt for Corporations 1,662.28 0.5% 3.1%
Economic Activity
Industrial 4,159.14 3.0% 22.9%
Retail 14,235.74 -1.1% 23.6%
Non-Financial Services 7,629.18 3.1% 20.0%
Insurance and Banks 4,760.26 1.5% 14.8%
Brokerage Firms 466.98 0.0% 12.8%
Financial Groups 425.26 2.0% 27.1%
Sector
Mining 12,365.93 8.2% 19.0%
Industrials 3,349.85 -0.1% 13.6%
Construction 17,171.83 0.3% 17.3%
Retail 17,949.89 3.7% 17.1%
Communications & Transportation 42,539.08 -0.1% 15.9%
Services 1,509.17 0.9% 36.8%
Holding Companies 3,728.67 4.0% 16.6%
Index REAL (1) DOLLARS (2)
Monthly Accrued Monthly Accrued
Stock Market
IPC 0.9% 14.2% 2.4% 15.3%
INMEX 1.1% 16.7% 2.6% 17.7%
Mutual Funds
Equity 0.3% 9.0% 1.8% 10.4%
Debt for Individuals -0.1% 0.2% 1.4% 1.4%
Debt for Corporations -0.1% 0.7% 1.4% 1.9%
Economic Activity
Industrial 2.4% 20.4% 4.0% 21.4%
Retail -1.7% 20.5% -0.2% 22.1%
Non-Financial Services 2.5% 17.1% 4.0% 18.5%
Insurance and Banks 0.9% 11.9% 2.5% 13.4%
Brokerage Firms -0.4% 10.0% 0.9% 11.4%
Financial Groups 1.4% 23.9% 2.9% 25.6%
Sector
Mining 7.6% 16.0% 9.2% 17.6%
Industrials -0.5% 10.8% 0.9% 12.3%
Construction -0.3% 14.4% 1.2% 15.9%
Retail 3.1% 14.2% 4.7% 15.7%
Communications & Transportation -0.7% 13.1% 0.8% 14.4%
Services 0.3% 33.4% 1.8% 35.1%
Holding Companies 3.4% 13.7% 5.0% 15.2%
(1) August inflation: 0.62% January-August inflation: 2.52%
(2) August depreciation: -0.89% January-August depreciation: 1.2%
Ramon W. Ruiz is a freelance writer who worked in the Mexican financial sector for 13 years. |
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