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Mexican peso, Mexican stock ETFs fall after Sheinbaum’s election as president (NYSEARCA:EWW)
Hector Vivas/Getty Images News
The Mexican peso fell 2.8% against the U.S. dollar Monday morning after Mexican election results indicated the country’s ruling party could be on the verge of securing a supermajority. The iShares MSCI Mexico ETF (NYSEARCA:EWW) fell 7.5% in late morning trading, and the Franklin FTSE Mexico ETF (NYSEARCA:FLMX) was down by a similar amount.
Claudia Sheinbaum, climatologist and former mayor of Mexico City, won the presidential election by far, according to media reports, making her the first woman to hold this position.
Sheinbaum, winning between 58.3% and 60.7% of the vote according to Reuters, succeeds Andrés Manuel López Obrador. Both are part of the Morena party. The Mexican constitution limits those who win the presidency to one term. The left-wing political party has been in power since 2018.
The landslide victory indicates the party may be able to reach a two-thirds majority in the Senate. This could allow the Morena party to adopt constitutional changes that could weaken Mexican democracy and increase state involvement in the economy. The falling peso and falling Mexican stock prices reflect fears of increased risk to the business environment.
“Even if Morena fell short of a two-thirds majority in the Senate, opposition parties could swing and favor Morena on issues that could have a significant impact on the business environment,” Alejo Czerwonko, chief investment officer for Emerging Markets Americas at UBS Financial Services. , said Reuters.
Sheinbaum promised to continue all of López Obrador’s policies, including a universal pension for the elderly and a program that pays young people for apprenticeships, the Associated Press reported.