What direction will the new Mexican president take? As of yet, this is unclear, and we will maintain limited positions in Mexico until we get more clarity.
In line with the polls, Andrés Manuel López Obrador (AMLO) won the Mexican presidential elections by a landslide. According to the quick count announced by the electoral authority, AMLO captured over 53.0% the votes. His nearest rival, Ricardo Anaya, got only close to 22.5% of the votes. AMLO obtained more votes than his three opponents combined and secured the largest presidential victory in Mexico’s history. AMLO’s party, Morena, and its coalition partners look to have secured a simple majority in Congress. The inauguration of the new president will be on 1 December.
In AMLO’s past speeches and initial steps of his campaign, he was very left-leaning and nationalistic in tone. Once the polls strengthened, the tone became more conciliatory versus businesses and markets. The key question remains ‘Who is the real AMLO?’ Will he be a moderate president or will he be of the more populistic and nationalistic kind? During his campaign, AMLO said he would double pensions for the elderly upon taking office on 1 December, as a first step to reduce Mexico's disparate income levels. He also said that he would be fiscally disciplined and that taxes would not be raised. Early in his campaign, Mr López Obrador had often used confrontational language when referring to Mr Trump. In his victory speech, however, he struck a more conciliatory note, saying he would seek "friendly relations".
Given these mixed signals that we have been getting from Mr López Obrador, we will base our investment decisions on the actual policies that he will pursue and not on the statements that he has made in the election campaign. Besides that, the current market environment in emerging markets is such that politicians will not easily get the benefit of the doubt like Brazil got in 2016. The rising risk of a trade war, the Fed raising interest rates and an unpredictable US president have made the market much more risk averse than in 2016.
In our view there are four key policy areas that have to be monitored closely:
We currently hold small positions in Mexico in our emerging markets equity funds. We believe this is the appropriate stance given the economic and political uncertainty. We are however open to increasing our positions in the future, but this will depend on more clarification on the policy direction that the new president will take.
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.