ETFs
ETFs in India and Mexico fall after election results
ETFs tracking Indian and Mexican stocks fell sharply this week following unexpected election results in both countries, as Indian President Narendra Modi secured a smaller-than-expected majority and a landslide victory for the Mexican party Morena raised fears of anti-market reforms.
In India, the Nifty 50 index was down 5.9% on Tuesday while the BSE Sensex lost more than 2,000 points, falling to its lowest level since early 2022.
Meanwhile, after Sunday’s presidential election, Mexico’s benchmark stock index – the Mexican CPI index – fell 6% on Monday.
The results meant that the $3.7 billion iShares MSCI India UCITS ETF (IIND) fell 6.6% on Tuesday, while the $621 million Franklin FTSE India UCITS ETF (FRIN) fell 6% on the same day.
The largest holding in IIND and FRIN is Reliance Industries, whose share price plunged 9.6% on the Bombay Stock Exchange on Tuesday.
The market decline stands in stark contrast to India’s label, central emerging markets, with IIND and FRIN gaining 12.9% and 12.3% respectively since the start of the year.
Meanwhile, the $220 million Xtrackers MSCI Mexico UCITS ETF (XMEX) and $67 million iShares MSCI Mexico Capped UCITS ETF (CMX1) fell 11% and 6.6% respectively on Monday.
In 2023, ETFs tracking Mexican stocks were among the the most efficient single-country ETFs after the Bank of Mexico hinted at interest rate cuts in early 2024.
Yet investors fear that Morena’s victory could pave the way for market-damaging reforms, including a reassessment of regulation of the justice system and pensions.