The revamped Nafta deal has raised the prospect of investment picking up again in Mexico, but foreign investors remain wary of the incoming president’s proposed policies and will be closely watching his plans for the country’s oil sector. The newly-minted United States-Mexico-Canada Agreement (USMCA), agreed earlier this week, has helped to soothe trade tensions between the longtime strategic allies and eased investor concerns about the Mexican economy.
“The agreement removes a major risk,” said Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management. “It sets the rules of the game and injects an important source of stability that will bring back confidence.” With trade concerns now ebbing, investors have shifted their attention to another potential hazard: president-elect Andrés Manuel López Obrador. He will take office in December following his landslide victory against Mexico’s political establishment.
While Mr López Obrador has somewhat moderated his leftwing, nationalist stance, vowing to adhere to fiscal prudence and respect the central bank’s independence, many investors are concerned about what he could do with such a decisive political mandate.