Investment insights from Capital Group
Now until 1 October 2024: The market will be closely monitoring the backgrounds of key cabinet members and public statements from the president-elect over the next four months. Although the new administration might not substantially jeopardise macroeconomic stability, a Morena-led government and Congress could be hesitant to endorse essential reforms or implement measures necessary for attracting investment.
September-October 2024: During the one-month gap between the new term for congress and presidential inauguration, AMLO could prioritise approving as much of his reform agenda as possible before his term concludes. This period will also give us a sense of Sheinbaum’s priorities vis-à-vis reforms, and whether the new administration can quickly corral a two thirds majority in the Senate.
Now until November 2024: US election activity will also be key to watch, especially if the market starts to price in the implications of a Trump presidency. Trump has made the southern border crisis with Mexico a top issue in his campaign, and may raise tensions using the threat of border closures. That said, the US’s strategic and economic interests in Mexico have grown as trade and manufacturing have pivoted away from China towards US allies.
November/December 2024: Towards the end of the year, a seat will become available on the Supreme Court of Justice of Mexico. The Morena administration will then have appointed four of the eleven Supreme Court justices, the minority needed to block a law approved by Congress on constitutional grounds. The budget is also expected to be announced in November, which will signal whether Sheinbaum maintains AMLO’s “republican austerity” and fiscal conservatism, as she asserted in her acceptance speech.
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