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Investors take their money out of Mexico

by Yucatan Times
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Deposits toward the outside increased due to uncertainty – Banxico.

MEXICO (Banco de Mexico) – During 2019, Mexicans with financial assets outside the country increased their deposits in foreign institutions, from 8,132 billion dollars registered in 2018 to 16,10 billion.

According to data from the Bank of Mexico (Banxico), these assets are the highest since 2016 when they accounted for nearly 25 billion dollars.

The report of the balance of payments for 2019 indicates that only in the fourth quarter of that year, 2,514 billion dollars left the country compared to 733 million for the same period in 2018.

The information from the central bank shows that in all last year no return of capital was observed, as it happened between July and September 2018, with 2,378 billion dollars, in other words, after the result of the presidential elections, in which the current government of the Fourth Transformation was victorious.

The registered assets can be deposits in institutions, currencies, or credits to suppliers.

The uncertainty
“It is because of the uncertainty that the assets of Mexicans abroad are growing,” said the director-general of the organization “Mexico Como Vamos,” Valeria Moy.

What leads someone to have deposits abroad is because they feel safe outside, she said.

“There are issues that for every family, person or company speak of confidence in the performance of the following years that are leading many to make deposits abroad. Since they are not sure what will happen here, they cover themselves and take their money to a safer or less risky place like the United States or Europe“. She explained.

Although in Mexico, the reward for investors is high compared to other markets, she said.

“There is no certainty about the economic situation of the country or fear of a depreciation of the exchange rate.”

Valeria Moy noted that the assets that are among the safe havens for investors are the dollar and gold. She also indicated that capital is shelter in these safe havens. The data released in the “Balance of Payments report,” states capital inflows and outflows in foreign direct and portfolio investment.

During 2019 in that record was observed fewer capital inflows to markets compared to previous years. On the other hand, investment of Mexican companies abroad increased, reflecting that nationals see a better picture out there.

Ernesto O’Farril, director of Bursamétrica, said that in 2019 the economy suffered several internal and external shocks, which hit the confidence of investors.

O’Farril said that in the errors and omissions part, where the origin of capital not identified or what does not fit in the balance, 8.814 billion dollars were reported against 9.923 billion. In comparison, deposits of foreigners in Mexico reached 154 million dollars during 2019 against 175 million in 2018. 

By the fourth quarter of 2019, they had 863 million dollars in the country compared to $133 million in the same period in 2018.

The Yucatan Times

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