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4 Mexican Stocks Rallying As Joe Biden Visits

Stocks in this article: GMK IBA MXT TV

Mary Lynn Cesar, Kapitall: Joe Biden wants "more people, goods and information…” from Mexico. Do these rallying stocks qualify?

Last week, Vice President Joe Biden went to Mexico to meet with President Enrique Peña Nieto and launch the inaugural US-Mexico High Level Economic Dialogue (HLED). First announced in May 2013, the annual cabinet-level exchange aims to “advance strategic economic and commercial priorities central to promoting mutual economic growth, job creation, and global competitiveness.”

[Read more from Kapitall: Alibaba IPO Coming to the US]

Annual trade between the US and Mexico currently amounts to $500 billion, or over $1.25 billion a day. Vice President Biden spoke about the countries’ economic partnership during his visit, stating that the controversial North American Free Trade Agreement (NAFTA) led to the quadrupling of two-way trade between the two nations. HLED plans to build upon that relationship through targeted work under three pillars:

  • partnering for regional and global leadership
  • promoting competitiveness and connectivity
  • fostering economic growth, productivity, entrepreneurship, and innovation.

Contraction, reforms, growth

Economic growth has been a challenge for Mexico so far this year, and the Finance Ministry has cut the country’s growth forecast twice over the past four months.

  • In May the growth outlook was revised to 3.1% from 3.5% following weak growth and low exports in Q1.
  • Then it was lowered to 1.8% in August after the economy shrank by 0.74% in Q2. 
  • This was the country’s first contraction in four years.

Mexico’s first half GDP growth is in line with the situation the Organization for Economic Co-Operation and Development (OECD) described in its May economic outlook. In addition to expecting a weak first half, the OECD wrote that amidst improving financial conditions and a strengthening US recovery, “growth is projected to firm up going into 2014.”

The international economic body considers President Peña Nieto’s economic reforms as part of Mexico’s improving financial landscape. Since entering office in December, President Peña Nieto has signed into law an overhaul of the telecommunications and broadcast industries that promotes competition and investment, and provide Mexicans with increased access to those services.

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