Thread: Politics May Shake Mexican Market/Economy

Because I'm new to this effort and am still catching up, this post is a little late. In any event, now that he's dumped 11 million problems on us, and his economy needs help, we now can expect Vicente Fox to hold out his hand again, this time palm up.

Originally Posted by Brendan M. Case, Dallas Morning News, Apr 1

Investment Quarterly: Politics may shake Mexico's market
MEXICO CITY – Political tension is seeping into Mexico's financial markets, foreshadowing a trend that's apt to intensify in the 15 months before the nation's 2006 presidential election, economists said Thursday. The issue hits a nerve in a country where elections sparked several economic crises between 1976 and 1994, fueling illegal immigration to the United States and slashing U.S. exports to Mexico.

These days, market watchers are tracking whether lawmakers will strip Mexico City's leftist mayor of immunity from prosecution in a land dispute that could keep him out of the 2006 race. It's not Mayor Andrés Manuel López Obrador's left-wing views that are rattling investors, but the worry that if the current front-runner is barred from running for president, the election could be seen as tarnished. That would erase the democracy that dividend Mexico gained in 2000 when President Vicente Fox unseated a ruling party that had been in power for 71 years. Polls show that most Mexicans view the charges against Mr. López Obrador as politically motivated.

"The market perceives López Obrador's potential loss of immunity as a negative," said Alfredo Thorne, an economist with J.P. Morgan Chase & Co. "Foreign investors in particular want to see a clean election in 2006." The Mexican Bolsa's leading index has fallen 8.7 percent since hitting an all-time high on March 7, even as Mexico's economic outlook continues to improve. Others say economic causes, including profit-taking and rising U.S. interest rates, more fully explain the fall and recent increases in Mexican rates.

Jonathan Heath, chief economist at HSBC México, plays down fears of economic instability before the 2006 election. As for Mr. López Obrador, a congressional committee is expected to vote today on his fate. Markets will be further rattled if Congress does act against the mayor, said Carlos Peyrelongue, an analyst with Merrill Lynch & Co. in Mexico City. Mexican Economy
E-mail bcase@dallasnews.com

April 1 is not late. By the way, I have edited your headline to correspond with the original piece. In news articles section, it is requested that posters use the actual headline from the original piece. This helps us to avoid duplicate postings.

Thanks!