The election of a leftist president in Mexico slipped under the radar of most global investors. So attuned were we to the issues between America and China that a leftist populist who ran on a platform of fighting crime and tearing up business contracts that were determined to be corrupt. In the early days of the electoral win, the incoming Mexican president soothed unsettled businesses by claiming
The first official act of Andres Manuel Lopez Obrador was the holding of a plebiscite to cancel the building of a new airport that would have served Mexico City. The wording of the vote was specifically designed to result in a no. The voting area was jerrymandered to produce an outcome that would favor the goals of the new president. Only 2% of the voting population of Mexico was permitted to vote on the issue.
Upon the results of the vote (70% no-30% yes) to stop the building of the airport, the project was declared cancelled. $6 billion of bonds issued to pay for the airport are now in limbo, a 1/3 completed project will now turn to dust and up to $10 billion of financial penalties may be fought for in Mexican courts, potentially exceeding the cost of the airport. All of this pertinent was considered irrelevant and withheld from plebiscite voters in the decision process.
The breaking of a firm and binding contract by the incoming Mexican president, based upon a flimsily written and hastily executed plebiscite, may result in the entirety of the Mexican listed equity market being given a mark down of some consequence.
https://www.marketwatch.com/story/mexicos-lopez-obrador-cancels-13-billion-mexico-city-airport-project-2018-10-29
https://finance.yahoo.com/news/imf-warns-uncertainty-over-lopez-182026558.html
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