Capital leaves the country towards better options: experts

by times news cr

According to data from Banxicountil October ‌20 ‍there⁣ is a​ significant outflow ⁤of capital⁢ from the ⁤country, ‍he‍ noted Felipe Mendozafinancial‌ broker analyst AFTX.

This after until October 20, ⁤the last ⁤date available in figures⁢ from the Bank of Mexico, our country⁢ registers⁣ an outflow of 76 thousand⁤ 416.60 million pesos, 4.14% ‍ of the total that foreigners‌ had invested in Mexico.

“Since April‌ 2020, there has not ‌been an exit from capitals of that size”he explained.

In an interview with ⁤this newspaper, he reviewed that investors are betting a lot on the United States now more developed economies ⁢where the⁣ returns on their variable income are higher, they will even move depending on what happens electorally.

“Apart from the ​fact that capital seeks to have better returns, ​we know that Mexico is experiencing ‌a panorama ⁣uncertain due to its political⁢ climate and investment does not like that,” he stated.

“They ⁤don’t usually⁢ like it because of the uncertainty⁣ that can reflect and they prefer to​ make decisions ⁢to flow their money⁣ to​ other, slightly⁣ safer markets.”

In ​this⁢ regard, Janneth Quiroz, director of⁣ financial analysis at ⁢Monex, explained that for the moment ⁢this capital flight must be taken with caution, considering that many ⁢government securities operations are not accounted for by ‌ Banxico, because there are transactions that are made outside the⁣ country.

He recognized​ that there is a trend ⁤of⁤ a fall in⁤ 88 billion pesosat least ​until the last data ⁢provided.

“We​ still⁢ don’t ​know the ‍full story of ⁤October… but this latest data⁤ implies a drop of 4.8%.”

This indicator, he added, can be affected by exchange ​rate variations… ⁣although it should still be followed ⁤with caution, but from January to October there ​have​ been some 14.4 billion dollars.

Quiroz said that there are several factors‍ that can lead to the outflow ‌of investments, such as the decision of⁣ the Fed and other banks on rates. Furthermore, nervousness about the change of power in Mexico in ‍June ⁤moved ‌capital towards​ other more attractive ⁢places with⁤ returns such as South Africa.

Time.news​ Editor: ⁤Good morning, Felipe! Thank you for joining us today to ⁣discuss the significant capital outflow from Mexico, as highlighted by recent data from Banxico. Could you ​start ⁣by ​giving our readers an overview of what the current figures look ⁤like?

Felipe ⁣Mendoza: Good morning! Absolutely, it’s a pleasure to ‌be here. As of October 20, Mexico has recorded a capital outflow amounting to 76,416.60 million ⁢pesos,⁤ which⁢ roughly represents 4.14% of the total foreign investments in the country. This figure is quite alarming since it’s the largest exit we’ve seen since​ April 2020.

Time.news Editor: That is indeed concerning. What do you believe is⁤ driving this ⁢outflow, especially considering the timing?

Felipe Mendoza: There ‍are a couple of key ‌factors at play here. ⁢Firstly, many investors are currently favoring ‌the ⁣ United States and ⁣other more ⁣developed economies where ⁤they can achieve better returns on their investments. It’s important to note that the global economic‍ landscape is ‌changing ‍and evolving,⁤ pushing investors ⁢to look for more lucrative opportunities elsewhere.

Time.news Editor: ‍You mentioned better returns—how do the returns in Mexico compare to⁣ those in⁢ the U.S.?

Felipe Mendoza: The ⁤gap has widened significantly‍ in ‌recent times. While Mexico traditionally provided competitive ‍returns,⁣ various elements such as economic ‌stability,⁣ political climate, and regulatory environments in the U.S. are making it more attractive. For instance, there’s the potential for ‌heightened returns in U.S. equity markets, which ⁤draw investor attention away from Mexico.

Time.news Editor: This brings us to the political environment. You​ hinted earlier that investor sentiment can ‍shift due to electoral dynamics. Could ‌you elaborate on that?

Felipe Mendoza: Certainly. Political events,​ such as ‌elections, can⁣ create uncertainty. Investors often reassess⁤ their risk profiles based on the outcomes or even the pre-election sentiment. If they perceive that a particular​ election may lead to unfavorable‍ policies or instability, it can trigger capital flight, as seen ‍in‍ our current scenario.

Time.news Editor: That makes sense. In your opinion, what‍ can Mexico do to ⁣address this outflow​ and regain investor confidence?

Felipe​ Mendoza: Mexico needs to focus on strengthening its economic ‌fundamentals. This includes ​ensuring political stability, improving regulatory frameworks, ​and promoting ⁢economic growth through innovation and infrastructure. Additionally, transparent communication from government officials regarding policies and reforms can reassure investors.

Time.news Editor: It sounds like a multi-faceted approach is essential. As we look ahead, what are your predictions⁣ for future​ capital flows in and out of Mexico?

Felipe Mendoza: If current trends continue,⁤ and if investors ‌see no qualitative changes in Mexico’s economic ​management and political landscape, we may witness⁤ sustained capital outflows. However, if the ‌government can effectively address these issues, we could ​see a recovery of confidence leading to renewed inflow.

Time.news Editor: Thank‍ you, Felipe.‍ Your insights are invaluable as we navigate this ‍complex economic landscape. Is there anything ⁤else you’d like to‍ share⁣ with our readers?

Felipe Mendoza: Just to emphasize⁢ that informed investment decisions rely greatly on understanding the ‌broader economic and political context. ​Staying informed and adaptable is key. Thank you for having me!

Time.news Editor: Thank you for your time, ⁤Felipe!‌ We ⁣appreciate your expertise‌ on this pressing issue.

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