| NEW YORK
NEW YORK Feb 22 Mutual fund managers are
shifting their portfolios from Mexican exporters and
manufacturers into companies that focus on penny-pinching
consumers as fears over President Donald Trump's trade and
immigration policies threaten to disrupt relations between the
Amid the uncertainty, Mexican consumers are expected to
tighten their belts and boost their savings, fund managers say.
An index of Mexican consumer confidence slid in January to its
lowest on record amid rising tensions.
The portfolio changes from firms including T. Rowe Price
, Federated Investors and Fidelity come amid
uncertainty over the fate of the North American Free Trade
Agreement and a possible tax on goods produced in Mexico as well
as new U.S. immigration guidelines.
"We expect most of (consumer income) to go to staples and
savings until confidence returns," said Chuck Knudsen, a
portfolio specialist for emerging markets at T. Rowe Price.
Knudsen said his team is shifting its portfolios into stocks
such as Wal Mart de Mexico, the Mexican division of
U.S. retailer Wal-Mart Stores Inc, and banking company
Grupo Financiero Santander Mexico.
"We think these companies are well positioned to grow going
into a period where we expect a sluggish economy," Knudsen said.
Mexico's stock market tumbled 8.5 percent in the week
following Trump's unexpected victory. The peso hit a record low
against the dollar just before his January inauguration,
sparking fears of a spike in inflation.
Mexico ships 80 percent of its exports to the United States,
and about half of Mexico's foreign direct investment has come
from its northern neighbor over the past two decades.
Trump has said he wants to impose a 20 percent tax on
Mexican imports to pay for construction of a border wall between
the two countries.
The peso has recently strengthened by 8 percent and Mexican
equities have jumped 2.7 percent on hopes that Trump will not
follow through. Stocks remain 1.8 percent below their level
before Trump's November victory.
Senior U.S. envoys met with Mexican officials in Mexico on
Wednesday, a day after the United States issued the new
Geoffrey Pazzanese, a senior portfolio manager at Federated
Investors, said Mexican stocks still look expensive given
falling profitability at a time when interest rates will likely
rise. He is underweight on Mexican stocks overall.
But Pazzanese remained bullish on domestic-oriented
companies such as restaurant operator Alsea, whose
franchise portfolio includes Domino's Pizza, Burger King and
Consumer spending will likely be bolstered, Pazzanese added,
by a spike in remittances sent to the country by Mexicans living
aboard, which jumped 6.2 percent to $2.3 billion in December
from the same time a year earlier.
He is also bullish on airport operator Grupo Aeroportuario
del Sureste. Its Cancun airport will likely remain
popular with U.S. tourists looking to take advantage of the
cheaper peso, he said.
(Editing by Jennifer Ablan, Christian Plumb and Jeffrey Benkoe)