Mexican President Andrés Manuel López Obrador. Photo: Pedro Gonzalez Castillo/Getty Images
Barely a month into his term as Mexico's president, Andrés Manuel López Obrador is facing a swelling gasoline crisis — "one that threatens to cut into his popularity and worsen the nation’s already-sluggish economy," the Los Angeles Times writes.
The big picture: But even as the gas imbroglio rages, investors have been content to buy or hold Mexican assets. The nation's radical, far-left, self-described revolutionary president has their confidence.
What they're saying: "He has met or exceeded expectations," said Jim Barrineau, head of emerging markets debt at Schroders. "We were skeptical that he would be able to balance his desire for social programs with a reasonable fiscal policy. So far it seems like he has."
- Mexican Finance Minister Carlos Urzua and a team met with dozens of investors in New York recently. It was called "impressive" and "confidence building" by attendees.
- "We are very pleased," said Jin Zhang, an executive director and portfolio manager at Vontobel Asset Management who oversees $39 billion and says he holds significant investments in Mexican stocks. "We had been watching pretty closely the whole process."
What it means: The performance of his economic team combined with the president's fiscally austere budget — which still allocated increased spending to programs for the poor, new mass transportation projects and scaled-back banking regulations — have provided López Obrador with a longer leash from the market.
- That was on display this week as Mexican stocks held steady and the peso rose in value against the dollar through the turbulent gas shortage.
"Remember, there were people eight or nine months ago comparing AMLO to [former Venezuelan President Hugo] Chavez and that’s not at all what we have," said Cathy Hepworth co-head of emerging market debt at PGIM Fixed Income. "Nor is he …what we’ve had for the past 20 years in Mexico. And maybe at the end of the day some of what AMLO has in store for Mexico is what Mexico needs. You just have to be careful about how you go about making those changes."