On Tuesday, JPMorgan expressed a positive stance on Mexican stocks, suggesting that any potential weakness in the Mexican peso (MXN) could present a buying opportunity for investors. The firm’s strategist, Adrian Huerta, noted that while the market is currently pricing in a mild scenario for the MXN, any depreciation should be seen as a favorable moment to invest in equities.
The Mexican peso experienced volatility, surpassing the Ps21.00 mark earlier in the day, but later corrected back to around Ps20.4 following the postponement of tariffs. Although the Mexican Stock Exchange was not operational on Tuesday due to the Constitution Day Holiday, the S&P 500 Index closed the day with a decline of approximately 1%.
JPMorgan’s foreign exchange strategists reiterated their position that the implementation of a 25% blanket tariff could lead to an 8-12% drop in the MXN. This scenario, they believe, is not fully accounted for by the market. However, Huerta emphasized that Mexican equities are largely shielded from the potential fallout, with less than 10% of the MSCI Mexico Index exposed to exports. The firm maintains that much of the possible impact is already reflected in current equity prices.
The strategist highlighted that although there is uncertainty that may persist as negotiations continue over the next month, JPMorgan views any MXN weakness as an attractive entry point for equity investments. The firm has identified several companies as top picks for investors, including GFNORTEO, FIBRAPL, GCC, ASURB, AC, KOF, and CHDRAUIB, signaling confidence in these specific stocks amidst the current economic conditions.
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