JUNE 2005 EDITION ARCHIVE
Legal Updates
A boost of autonomy for municipal entities in Mexico
The Mexican Supreme Court clarified that article 115 of the Mexican Constitution grants municipalities the right to control and regulate the issues that are most important to their communities.Creditors’ rights and Mexican bankruptcy laws
In a world survey of creditors’ rights, the International Financial Corporation, a branch of the World Bank, rated Mexico’s protection of creditors’ rights in bankruptcy proceedings as 2 on a scale of 0 to 10, 0 being the worst and 10 being the best.Business & Politics Outlook
The Mexican peso expected to remain strong throughout the summer
Analysts quoted by the Financial Times mainly cite high annual interest rates approaching 10 percent, and the easing of political tensions in Mexico, as the main driving force of the peso’s current strength. Additionally, President Vicente Fox announced that Mexico has met its external debt payments up to 2007 in order to pave the way for economic stability during next year’s presidential election.Mexican consumers fuel the Mexican economy
Wal-Mart de México, which accounts for approximately half of Mexico’s retail market, recently posted a 5.4 percent real increase in same-store sales from last year. Consumer credit has also benefited, which is evidenced by GE Capital’s 130 percent annual growth on credit services for low-income consumers. Consumption accounts for 70 percent of Mexico’s Gross Domestic Product.Sluggish overall foreign investment in Mexico
Foreign investment in the Mexican Stock Market has diminished over the past year according to the Mexican Stock Exchange (Bolsa Mexicana de Valores), which recently reported a five percent year-on-year decrease from 47 percent to 42 percent. Similarly, the Mexican Department of the Economy and the Bank of Mexico (Mexico’s central bank) announced that during the first quarter of 2005, Mexico attained the lowest amount of direct investment in a first quarter since 1990.Gearing up for next year’s presidential election
Santiago Creel resigned from his post as Secretary of the Department of the Interior to launch his presidential candidacy for the right of center Partido de Acción Nacional (PAN). On the other hand, Emilio Chuayfett Chemor, the speaker for the Partido Revolucionario Institucional (PRI) in the Mexican House of Representatives, asserted that Mexicans living abroad would be able to vote outside Mexico in the next presidential election.Encouraging expectations for the long run in the hotel industry
Hilton Hotels, a U.S. based hotel corporation, unveiled a plan to invest $200 million through 2010 in new hotels in five of its brands in Mexico.Canadian silver mining operations set to invest in Mexico
The subsidiary of Canadian silver company, Panamerican Silver, is prospecting the building of a new silver processing facility that would require an $80 million investment in Mexico’s Northwestern state of Sonora.New mobile telephone factory on the U.S.-Mexico border
The Mexican affiliate of Nokia, a Finnish telecommunications company, announced a $20 million investment in a new mobile telephone factory in Reynosa, Mexico.U.S. investment in the Mexican transportation and logistics industry
TMM, a Mexican transportation and logistics conglomerate, closed a $60 million deal with its U.S. partner Kansas City Southern, for its railway division.Fledgling aerospace industry in México
The Yucatan peninsula hosts a growing aerospace industry, which is expected to top $1 billion in exports to the U.S. by 2010. Mexico is currently negotiating a Bilateral Aviation Safety Agreement (BASA) with the Federal Aviation Administration (FAA), where the Mexican government would oversee the design and manufacturing of parts in Mexico. U.S. aerospace companies currently operating in the Yucatan include Stein Seal Company from Pennsylvania and PCC Airfoils of Oregon.Another attempt to convert Mexican soccer league fans in the United States
Club Deportivo Guadalajara, popularly known as “Chivas” (goats), has entered the Major League Soccer (MLS) in Los Angeles in a $25 million deal. The new team will be called Club Deportivo Chivas USA and will be based in Los Angeles, California, the U.S. city with the largest Mexican population. This is the MLS’ latest attempt to boost its Mexican fan base. Most Mexicans follow their soccer teams at home and pay little attention to the MLS. Chivas owner, Jorge... [Read More]Economic Indicators
Exchange Rate
On June 9, 2005, the exchange rate published in the Official Journal of the Federation was 10.8494 pesos to one United States Dollar.