Identifier
Created
Classification
Origin
06MEXICO3672
2006-07-03 20:33:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Mexico
Cable title:
MEXICAN ELECTORAL UNCERTAINTY -- INITIAL MARKET
how-toVZCZCXRO8451 RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM DE RUEHME #3672 1842033 ZNR UUUUU ZZH R 032033Z JUL 06 FM AMEMBASSY MEXICO TO RUEHC/SECSTATE WASHDC 1965 INFO RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
UNCLAS MEXICO 003672
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD, AND EB/EPPD
STATE PASS USAID FOR LAC:MARK CARRATO
TREASURY FOR IA MEXICO DESK: JASPER HOEK
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN
E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV MX
SUBJECT: MEXICAN ELECTORAL UNCERTAINTY -- INITIAL MARKET
REACTION
Sensitive but unclassified, entire text.
UNCLAS MEXICO 003672
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD, AND EB/EPPD
STATE PASS USAID FOR LAC:MARK CARRATO
TREASURY FOR IA MEXICO DESK: JASPER HOEK
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN
E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV MX
SUBJECT: MEXICAN ELECTORAL UNCERTAINTY -- INITIAL MARKET
REACTION
Sensitive but unclassified, entire text.
1. (SBU) Summary. Following Sunday's indeterminate election
results, the Mexican Stock Market (Bolsa) opened July 3 up
4.17% where it remains at midday. The peso rose Monday
morning to between 11.10 and 11.20 to the dollar after having
closed June 30 at 11.42. While some observers point to
optimism at the Calderon lead, most note that the Mexican
markets will not react completely to the current situation
until after the July 4 holiday. None of the market watchers
we spoke with expressed significant concern over the current
uncertainty. End Summary.
2. (SBU) Chief Economist of the Bolsa, Alejandro Reynoso
expects that the brief rally in Mexican markets will be short
lived. No matter who wins, he said, markets will return to
levels consistent with macroeconomic variables which included
Mexico's strong economic fundamentals in Mexico and higher
interest rates abroad. The exchange rate would hover between
11.30 and 11.40.
3. (SBU) Sergio Luna, Vice President of the Economic
Research at Banamex-Citibank and Adrian Rizo, economist from
HSCB also expected the spike to continue at least through the
first half of the week with greater volatility. They see
investors as optimistic and willing to wait at least two
weeks to gauge how the political scene develops. He expressed
regret over U.S. headlines on the election which he
criticized as "exaggerated."
4. (SBU) Luna and Rizo, as well as, Marco Oviedo, director
of the office of relations with the investors in the
Secretariat of Hacienda (Treasury) agreed that, even before
SIPDIS
the final counts came in, markets already discounted a
Calderon victory. At this point, none of the advisors saw
trends changing to favor Lopez Obrador. Rizo and Oveido
believed that AMLO, under pressure from the Mexican press,
would respect the Federal Election Institute's (IFE) results,
although he would inspect the count closely. The analysts
noted that Investors could see that the election was a very
transparent process and this would contribute to stability.
Different from other elections, the 2006 presidential
election count was completely "on line" in which all
observers would learn of the results in real time.
5. (SBU) Luna added that investors were also optimistic
about Congress' composition in which PAN is winning seats and
PRI is losing significant ground. He called the PRI "the
main obstacle for passing needed reforms during the Fox
administration."
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity
GARZA
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD, AND EB/EPPD
STATE PASS USAID FOR LAC:MARK CARRATO
TREASURY FOR IA MEXICO DESK: JASPER HOEK
COMMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMAN
E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV MX
SUBJECT: MEXICAN ELECTORAL UNCERTAINTY -- INITIAL MARKET
REACTION
Sensitive but unclassified, entire text.
1. (SBU) Summary. Following Sunday's indeterminate election
results, the Mexican Stock Market (Bolsa) opened July 3 up
4.17% where it remains at midday. The peso rose Monday
morning to between 11.10 and 11.20 to the dollar after having
closed June 30 at 11.42. While some observers point to
optimism at the Calderon lead, most note that the Mexican
markets will not react completely to the current situation
until after the July 4 holiday. None of the market watchers
we spoke with expressed significant concern over the current
uncertainty. End Summary.
2. (SBU) Chief Economist of the Bolsa, Alejandro Reynoso
expects that the brief rally in Mexican markets will be short
lived. No matter who wins, he said, markets will return to
levels consistent with macroeconomic variables which included
Mexico's strong economic fundamentals in Mexico and higher
interest rates abroad. The exchange rate would hover between
11.30 and 11.40.
3. (SBU) Sergio Luna, Vice President of the Economic
Research at Banamex-Citibank and Adrian Rizo, economist from
HSCB also expected the spike to continue at least through the
first half of the week with greater volatility. They see
investors as optimistic and willing to wait at least two
weeks to gauge how the political scene develops. He expressed
regret over U.S. headlines on the election which he
criticized as "exaggerated."
4. (SBU) Luna and Rizo, as well as, Marco Oviedo, director
of the office of relations with the investors in the
Secretariat of Hacienda (Treasury) agreed that, even before
SIPDIS
the final counts came in, markets already discounted a
Calderon victory. At this point, none of the advisors saw
trends changing to favor Lopez Obrador. Rizo and Oveido
believed that AMLO, under pressure from the Mexican press,
would respect the Federal Election Institute's (IFE) results,
although he would inspect the count closely. The analysts
noted that Investors could see that the election was a very
transparent process and this would contribute to stability.
Different from other elections, the 2006 presidential
election count was completely "on line" in which all
observers would learn of the results in real time.
5. (SBU) Luna added that investors were also optimistic
about Congress' composition in which PAN is winning seats and
PRI is losing significant ground. He called the PRI "the
main obstacle for passing needed reforms during the Fox
administration."
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity
GARZA