What is the Trump effect on Mexican financial assets? A first answer was obtained last November.
According to The Mexico Fund, the MSCI Mexico index declined 3.6% and the Mexican peso depreciated 1.7% during November, to 20.38 pesos.
At the same time, the Fund’s NAV declined 3.5%, outperforming its benchmark index.
To considerar: the MSCI Mexico index is designed to measure the performance of the large- and mid-cap segments of the Mexican market. With 25 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Mexico.
The Mexico Fund is a closed-end, non-diversified investment company whose investment objective is long-term capital appreciation through investments in securities, principally equities, listed on the Mexican Stock Exchange.
And the Fund offers a vehicle for investors who wish to invest in Mexican companies through a non-diversified managed portfolio as part of its overall investment program.
The Trump Effect
From The Mexico Fund’s perspective, concerns related to the aforementioned tariffs influenced the negative performance of Mexican financial assets during the month.
In the United States, on November 5, 2024, the presidential election was held, where Donald Trump was elected. Later, on November 25, 2024, Trump announced his intention to impose a 25% tariff on all products imported from Canada and Mexico, as well as an additional 10% tariff on products from China. These measures would take effect on January 20, 2025. According to Trump, these actions seek to address illegal immigration and drug trafficking, considered border security issues, as well as to encourage Mexico and Canada to take action in this regard.
For her part, the President of Mexico has expressed her willingness for dialogue and cooperation to address these issues and find a consensual solution on tariffs.
Mexican economy
On the other hand, the Bank of Mexico (Banxico) lowered its benchmark interest rate by 25 basis points to 10.25%, while GDP for the third quarter of 2024 registered an annual growth of 1.6 percent.
The government presented its 2025 budget where it emphasized its fiscal consolidation goal, expecting a decrease in total public sector requirements (the broadest measure of the public deficit) from an expected 5.9% of GDP in 2024 to 3.9% of GDP in 2025.