Has Mexico’s Star Faded Away?

The politically induced selloff in Mexican markets has gone too far. In our view, investor fears about the constitutional changes are largely unwarranted. These reforms will have little to no ramifications for the economy in the foreseeable future, and it is not clear to what extent they can undermine Mexican democracy. Moreover, the market riot is not justified by the country’s decent macro shape. All in all, Mexican markets will resume their outperformance versus their EM peers sooner rather than later.