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Analysis

Opportunities abound: Banks are developing mobile and internet banking services for a growing number of online customers

Posted OBG AdminPosted in Uncategorized

Mobile and internet banking is at a relatively early stage of development in Mexico, but most players are convinced that it is the shape of things to come, and that banks that do not invest in developing their online and mobile presence are at risk of losing market share. According to a study by BBVA Research, around 16% of Mexico’s total banking transactions are carried out online, and 6.4% of…
Analysis

Starting small: Entrepreneurship is common, but greater support would spur growth

Posted OBG AdminPosted in Uncategorized

There is growing interest across Mexico in innovation and entrepreneurship, and in how they can contribute to raising the country’s levels of productivity, employment and economic growth. However, a review of what is happening in the country in this important space must be undertaken in two parts. The first involves the acknowledgment that as a developing economy Mexico faces serious structural problems,…

Analysis

Corporate bond market: Reforms set to drive new issues and boost liquidity

Posted OBG AdminPosted in Uncategorized

The corporate debt market in Latin America remains relatively small, and Mexico is no exception. As of December 2014, there was MXN1.02trn ($68.65bn) in outstanding corporate long-term bonds, including corporate, state, municipal and infrastructure issues, as well as those from state-owned companies and federal agencies. Corporate debt issuance has grown at a compound annual growth rate (CAGR) of 14.1%…
Analysis

Profitable activity: Lending continues to grow, while the ratio of non-performing loans falls

Posted OBG AdminPosted in Uncategorized

During their annual convention in May 2015, leaders of the Mexican Banking Association (Asociación de Banqueros de México, ABM) said that the industry was doing well. “Mexican banking is experiencing the best credit growth cycle in its history,” Luis Robles Miaja, president of the ABM, said, adding that “credit has been growing at a rate 3.7 times faster than GDP over the last 11 years”.…
Analysis

Wealth reserves: The nation’s sovereign wealth fund gets a slow start

Posted OBG AdminPosted in Uncategorized

On January 1, 2015 the new Mexican Oil Fund for Stabilisation and Development (Fondo Mexicano de Petróleo para la Estabilización y el Desarrollo, FMP) began operations. The FMP was created as part of the package of energy sector reforms and constitutional changes approved by Congress during the course of 2013 and 2014. Technically, it is intended as a sovereign wealth fund, destined to receive, manage…
Analysis

Higher standards: The new insurance law will further strengthen the industry

Posted OBG AdminPosted in Uncategorized

Mexico’s new insurance and sureties law (Ley de Instituciones de Seguros y de Finanzas, LISF) came into effect in April 2015. The law, considered one of the most advanced of its type in Latin America, seeks to bring the country into line with the Solvency II insurance industry regulatory standards developed in Europe. The new solvency framework consists of three pillars: pillar I concerns capital…
Analysis

Extraction protraction: Despite major hurdles, shale still holds great potential

Posted OBG AdminPosted in Uncategorized

At first glance, the story of Mexican shale oil and gas sounds frustrating. Like its northern neighbours Canada and the US, Mexico has some of the world’s largest shale deposits. The government’s deep energy reforms of 2013-14 created an environment attractive to international oil companies (IOCs) willing to invest the tens of billions of dollars needed to develop shale. But in 2014-15, just as…

Analysis

Sovereign bond market: 20 years on, Mexico becomes an emerging market success story

Posted OBG AdminPosted in Uncategorized

In the 20 years since the Tequila Crisis, Mexico has undergone an impressive transformation. The implementation of sound macroeconomic policies has been welcomed by global investors, resulting in greater confidence in the country’s credit risk profile, while recent structural reforms are expected to boost growth, investment and competition. Mexico has emerged as an attractive market for investors…

Analysis

Stock market: Despite emerging market downturn, solid prospects in Mexico

Posted OBG AdminPosted in Uncategorized

Return Of Risk Aversion During the last four months of 2014 emerging equity markets faced a strong decline. This was mainly due to foreign capital outflows, bolstered by a higher degree of risk aversion amongst investors and driven by the slump in oil prices, geopolitical uncertainty in Ukraine, Greece and the Middle East, and the anticipation of monetary policy normalisation by the US Federal Reserve. Against…
Analysis

Incentivised reform: A changing energy mandate spells new opportunities for hydrocarbons and electricity

Posted OBG AdminPosted in Uncategorized

Since the release of the energy reform in December 2013, the Mexican energy sector has been on the rise. Little by little the rules have been set to turn a closed sector with two state-owned giants – Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) – into a modern-day open market. Much Needed Pemex production has dropped by more than…