BRICs Creator ONeill Wowed by New Lulas Success
Comment of the Day

December 18 2013

Commentary by Eoin Treacy

BRICs Creator ONeill Wowed by New Lulas Success

This article by Nacha Cattan for Bloomberg may be of interest to subscribers. Here is a section: 

Pena Nieto, 47, wasted little time pushing his agenda after taking office a year ago. On his second day on the job, he signed a pact with the two biggest opposition parties to pursue legislative proposals to spur economic growth.

The reform agenda has drawn praise from Pacific Investment Management Co.¡¯s Bill Gross, BlackRock Inc. Chief Executive Officer Laurence D. Fink and former U.S. Treasury Secretary Lawrence Summers. O¡¯Neill says the legislative victories put Pena Nieto in position to be the decade¡¯s most successful policy maker from the Group of 20 nations, a title he gave to Brazilian President Luiz Inacio Lula da Silva in the past decade.

Changes he implemented include forcing teachers to undergo annual evaluations and curbing the market power of dominant telecommunications companies such as billionaire Carlos Slim¡¯s America Movil SAB. He also signed measures to encourage banks to lend more and added taxes on dog food, soda pop and high-calorie snacks in an attempt to reduce the government¡¯s dependence on oil revenue.


Eoin Treacy's view

While Mexico's reputation abroad has been tarnished by media reports of drug related violence, this may also have helped to foster resolve to support reforms. From my new home in Los Angeles, I look forward to visiting Mexico and seeing for myself how these measures are having an effect on the ground.

The Mexican Peso halved during the credit crisis as oil revenues plummeted. It has traded between MXN12 and 14 for much of the last few years which is quite a bit weaker than it traded prior to 2008. This will have helped improve the country¡¯s competitiveness, not least as a manufacturing destination for US companies. A break in the Dollar¡¯s progression of higher reaction lows, currently near MXN12.8, would be required to question potential for additional higher to lateral ranging.  

The iShares MSCI Mexico Capped ETF continues to maintain an upward bias within its current range. 



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