A Trader's Guide to Surviving the Elections
June 29, 2018
https://www.bloomberg.com/graphics/2018-mexican-election/?utm_medium=email&utm_source=newsletter&utm_term=180629&utm_campaign=bop
It’s two days to elections and markets are
expecting leftist Andres Manuel Lopez Obrador to coast to victory. Hold on
tight, traders warn. We’re in for a bumpy ride.
Markets will likely dip in the weeks following the
election amid concerns his policies will dissuade foreign investment in the
energy industry and create a bloated deficit. If Lopez Obrador wins a big
majority in congress, things could get much worse. The most pessimistic view,
from Exotix Capital strategist Rafael Elias, is that the peso will tumble to as
low as 27 per dollar before the next president takes office Dec. 1.
But that’s where things start looking up. There’s a
general consensus among investors that Mexico would be just fine over the long
term and that after Lopez Obrador’s inauguration there could even be a rally.
Many point to his moderate policies as mayor of Mexico City and say most of his
proposed cabinet members are well qualified for their jobs. Some likened the
situation to when Brazil’s Luiz Inacio Lula da Silva surprised investors by
governing with business-friendly policies. Even Elias sees a strong rally after
inauguration.
Mexicans go to polls Sunday to elect their new
president, nine governors, all new members of congress and close to 3,000
mayors and local legislators in the nation’s largest election in history.
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