It was an exceptional week for the debt of Mexican exporters and construction companies, as Joe Biden's victory as president of the United States stimulated optimism to increase spending by our largest trading partner.
Elementia SAB de CV, building materials manufacturer, as well as the industrial conglomerate Alfa SAB de CV and the cement company Cemex SAB de CV, outperformed their emerging market peers and most of their local counterparts. Elementia and Cemex would benefit from spending on infrastructure, while Alfa and Grupo Kuo SAV de CV could get a boost from the stimulus, according to Oppenheimer analyst & Co. Omar zeolla, In New York.
“This is based on the idea that a rescue package is coming. ", says Luis Maizel, co-founder of LM Capital Group in San Diego. "Both parties want it, so it will happen ".
A spending deal of any size, along with improved trade prospects with the United States under Biden, will help Mexican exporters, in particular to infrastructure and construction companies, according to Zeolla, who predicted last week's rebound. Alfa, Cemex and Kuo get at least the 23% of your US income, as well as Elementia, who gets the 57% of your income from outside of Mexico.
“The momentum of emerging market assets continues to be key to the performance of Mexican fixed income this week ”, assures George Lei, Bloomberg currency strategist. “Bonds may get another boost if the Mexican peso extends gains to the key level 20, as many analysts predict ".
Firms joined a rebound in Mexico led by the Fed and Biden, when the weight passed a key technical barrier, local bonds rose and dollar-denominated sovereign notes maturing in 2030 they had their best week since may. Most global emerging market assets also advanced on the week as risk appetite returned..
More gains could be linked to global rebound in emerging markets.