In face of global volatility which is expected to increase in the middle to long-term, and the uncertainty surrounding Mexico’s presidential election , Mexican investors are protecting their money by safekeeping their investments abroad.
The Bank of Mexico (Banxico) found that, during the first quarter of 2018 , Mexican deposits in other countries increased to 7,799 million dollars , whereas they barely reached the sum of USD$5,559 million in all of 2017 .
In this regard, Mario Correa, chief economist at Scotiabank Mexico , said that these money transfers usually happen for two reasons : “On the one hand, the investors could be becoming nervous and withdraw their money, but it is also possible that they are seizing important financial opportunities abroad, buying assets and using them to reinvest, and this wouldn’t necessarily be bad news,” he stated at an interview with EL UNIVERSAL.
Another possibility, he noted, is that they might be diversifying risks as a reaction to many elements that are generating uncertainty, such as the U nited States’ new politics regarding fiscal regimes and taxes.
With the standardization of monetary policy, the change of cycle is becoming manifest in several countries. Some of the most important banks are raising interest rates, which is enough to generate restlessness.
“ Every geopolitical matter influences uncertainty, from North Korea to the Middle East . In Mexico, the most pressing matter is the presidential election, which is always expected to generate uncertainty,” he explained.
Ernesto O’Farril, head of Bursamétrica brokerage house
, mentioned that, in spite of the uncertain political climate, investments have kept on flowing , with an income of USD$9,000 million.
Banxico pointed out that the expectancy of growth for world economic activity in 2018 and 2019 has remained stable , but middle to long-term developments are increasing risks.
In that light, he explained that there could be greater volatility in international financial markets , due to the possibility of an increase in inflation levels of developed economies such as that of the United States.
The report shows that, between January and March , portfolio investments rose to USD$7,082 million , a larger amount than the USD$5,610 million entering financial markets on the year before.
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