Foreign investment leaves Mexico as coronavirus crisis bites

Amid the economic crisis caused by the coronavirus , foreigners have begun to withdraw their investments from Mexico.

Figures of Mexico’s central bank Banxico show that the government’s debt in hands of foreign investors rose to MXN $64 billion on March 19 , the lowest amount since December 5, 2019.

The loss of trus t of investors is reflected in the withdrawal of over MXN $150 billion compared to the MXN $2.2 trillion on February 21 , its highest level in 2020.

In particular, foreigners withdraw their investments from Cetes , considered the easiest instruments to Exchange for money.

As of March 19, they had MXN $167 billion in those assets, 77 billion less than on January 15, 2019 , when they were MXN $244 billion .

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In addition to the uncertainty due to the spread of the coronavirus and the collapse of oil prices , investors have withdrawn their capital because of the slow economic development and its implications for public finances, as exposed by Gerardo Copca , an analyst in MetAnálisis .

“Foreigners see Pemex’s situation as very risky for Mexico’s finances,” he mentioned.

Banxico’s most recent figures reach March 19 , so they do not include the result of the public referendum on March 21 endorsed by the government and criticized by businessmen which rejected Constellation Brands from building a brewery in Mexicali.

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They do not include, either, the announcement on March 26 in which Standard & Poor’s (S&P) downgraded Mexico and Pemex’s ratings with a negative perspective.

The announcement was unexpected as it was not foreseen for Moody's and S&P to reduce the grade of the country and analysts also thought that, after an adjustment of ratings, the perspective would be “ stable ” and not “ negative ,” as explains Copca.

In 2014 , Moody’s raised Mexico’s sovereign grade to “A” category for the first time ever, which it still keeps today, a characteristic that attracted investors.

In 2010, the country became the only one in Latin America to enter the CitigroupWorld Government Fond Index .

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The MXN $150 billion that left the country exceed the almost MXN $113 billion planned for the INSABI Health Institute in 2020.

The number is also twice the MXN $70 billion assigned for the Youths Building the Future program for 2020, and it is five times bigger than the MXN $28 billion for the Planting Life program .

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