Andrés Manuel López Obrador was recently sworn in as Mexico’s 58th president, but will the recent regime change result in a “Feliz Navidad” for the country as a whole and Mexico-focused exchange-traded funds (ETFs)? Early signs point to “yes” as President AMLO, his more familiar moniker, has taken early steps in the right direction.
The change in leadership comes as U.S.-Mexico border tensions were escalating. This stymied the momentum of Mexico-focused exchange-traded funds (ETFs) like the iShares MSCI Mexico Capped ETF (NYSEArca: EWW) and Direxion Daily MSCI Mexico Bull 3X ShsETF (NYSEArca: MEXX)–EWW gained as much as 3% on Monday’s trading session, while MEXX rose as high as 9%.
How AMLO handles the U.S.-Mexico border situation and his crafting of future policies will most certainly weigh heavily on the performance of these ETFs going forward.
Baptism by Fire for AMLO
Mexico’s recent change in leadership saw the controversial leftist candidate AMLO become its next president for the next six years as the 65-year-old firebrand has been referred to as the country’s version of U.S. President Donald Trump. That relationship with the very individual he was compared to will be tested as U.S.-Mexico relations regarding the border situation have become tenuous.
In the meantime, the number of migrants heading into Mexico from Central American countries like Honduras continues to multiply exponentially as they attempt to seek asylum within the United States. The number of those applying for asylum legally outweighs the number of immigration officials that can process the requests, causing a situation in Mexico where the country could be overrun by overcrowded migrant camps and shelters.
AMLO took his first steps to ameliorate the situation by signing an agreement with three Central American countries to address the seemingly uncontrollable flow of migrants into Mexico. According to Mexico’s foreign ministry, the agreement included a plan to fund jobs creation in the areas where the migrants are congregating, particularly the border city of Tijuana.
Vow to End Corruption
Among the many vows he made to the Mexican people at last Saturday’s inauguration, one of them was to address corruption in political realms.
“We will carry out a peaceful and orderly but also deep and radical transformation,” AMLO said. “Because we will put an end to the corruption and impunity that are blocking Mexico’s rebirth.”