BMV will have a post-election rally; waiting for NAFTA and the new government

The Mexican stock market could see a short rise after the elections on Sunday as voter uncertainty fades and the bet for undervalued stocks will remain under the influence and fluctuations of the negotiations and announcements from NAFTA. Analysts and experts consulted by Reuters said that although many investors ignore the victory of leftist Andrés Manuel López Obrador in the presidential elections, it remains to be seen whether his coalition will win a majority in Congress. which will define the political counterweight.

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"By analyzing the scenarios and taking into account the additional seats allocated to each party by proportional representation, we see less chance that MORENA (party López Obrador) gets a simple majority, which could be a JP Morgan said in a report Thursday

Among the actions that experts see as a potential upside, include the cement giant Cemex, the energy infrastructure company IENova, Lala, the giant producer of Cuervo Tequila and the Liverpool Departmental Store

But the duration of a possible stock market will be defined by what happens in the complex renegotiation of the North American Free Trade Agreement (NAFTA).) Between Canada , the United States and Mexico, which should resume with more decision in July after the Mexican elections, but still under the Washington threat to abandon the pact

L & # 39; S & P / BMV CPI index, which accumulates a 5% loss in the year (6.5% in dollars), is trading at a multiple P / U of 16.9 times, which is compared negatively with its historical multiple of 22.4 times, according to data from Thomson Reuters Eikon

The multiple P / U indicates the number of years that an investor has to wait to recover. investment in an instrument and is used to find out if the instrument is

"The stock market has been cheap for several months (…) Now, eliminating the political factor, this can make attractive some companies that do not are not so exposed to NAFTA ". "For others, investors will be in a" wait and see "mode for a while until they know the plans of the new government, said Reuters general investment director. Emerging Swiss bank UBS, Jorge Mariscal

"The rally that many anticipate could happen, but I do not think it's sustainable," he said.

Besides NAFTA and local elections, other experts believe that this could affect the local stock market and, therefore, it is necessary to establish some kind of waiting time.

"I n & # I would not go in yet; There are still some problems to be solved, "Nikolaj Lippmann, Morgan Stanley's chief emerging markets strategist, told Reuters, referring to trade tensions and monetary policy in the United States

. Technical analyst of Banorte, Víctor Hugo Cortés, the stock market could experience a slight rise and earn about 2,000 points, but this does not represent a change of trend, because it requires something fundamental, such as the elimination of the uncertainty surrounding the NAFTA

which traded on Friday at around 47,500 points, hit its best level of the year in January slightly above 51,000 points and fell to its lowest level at the end of May around 44,500 points.