July 4, 2018 / 6:19 PM / 3 months ago

Mexico's business chiefs praise Lopez Obrador after prickly campaign

MEXICO CITY (Reuters) - Mexico’s business elite had warm words for President-elect Andres Manuel Lopez Obrador on Wednesday after he assured them he respected private enterprise, a contrast to jibes in his campaign that some tycoons belonged to a “mafia of power.”

Mexico's President-elect Andres Manuel Lopez Obrador and Juan Pablo Castanon, President of the Business Coordinating Council (CCE) shake hands during a news conference in Mexico City, Mexico July 4, 2018. REUTERS/Daniel Becerril

The encounter between the powerful CCE business lobby and Lopez Obrador comes as markets took the election of the self-styled radical in stride.

At a news conference, CCE director Juan Pablo Castanon and Lopez Obrador said their meeting was characterized by certainty and trust.

“I want to express my satisfaction for the attitude of the business sector,” Lopez Obrador said. “They have acted very respectfully to us, recognizing our triumph.”

Since Sunday’s presidential election, Lopez Obrador and his team have focused on soothing market fears, saying he would not ramp up government spending and would respect the central bank’s independence.

Mexico’s business community has in turn reached out to try to ease past tensions with the new leader.

German Larrea, chairman of miner Grupo Mexico, published a full-page message in a national newspaper congratulating Lopez Obrador and applauding his comments. During the campaign, Larrea warned staff about voting for Lopez Obrador.

Claudio X. Gonzalez, whose family owns part of Kimberly Clark de Mexico, said on Twitter he wished Lopez Obrador the best and asked him to be a unifying figure.

Former President Vicente Fox, who had a tense relationship with Lopez Obrador when he was mayor of Mexico City and released a video during the campaign titled “how can you support Lopez? Impossible.” also congratulated him.

Lopez Obrador criticized all three during the campaign, in which Castanon also warned voters about the dangers of “populism.”

In March the CCE urged Lopez Obrador to stop questioning major planks of the current government’s economic agenda, such as a new $13 billion airport for Mexico City.

Mexico's President-elect Andres Manuel Lopez Obrador arrives at a meeting with the Business Coordinating Council (CCE) in Mexico City, Mexico July 4, 2018. REUTERS/Daniel Becerril

The leftist slammed corporate defenders of the airport project as “corrupt.” He has since moderated his stance.

On Wednesday, Lopez Obrador said even though his coalition will likely have a majority in Congress, he would not impose anything and said he was building an authentic democracy not a dictatorship.

Lopez Obrador and Castanon agreed to work together on labor issues for young people, after a campaign promise for apprenticeships funded in part by the government. Lopez Obrador said his youth programs and higher pensions for the elderly would together cost 150 billion pesos ($7.7 billion).

Investors say they have yet to see how the next president’s pledge to cut excess spending and corruption will pay for his promises.

“We have not had any detailed numbers on how this will be achieved or if this will even be possible,” said Graham Stock, emerging market sovereign strategist at BlueBay Asset Management.

Mexico’s peso on Tuesday posted its biggest daily increase in over two years, boosted by a global emerging markets rally as well as pledges from Lopez Obrador to not increase spending. The peso and strengthened slightly on Wednesday.

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Despite uncertainty about what policies Lopez Obrador could put in place, foreign investors have been comforted by the discipline of Mexico’s central bank.

“Banxico could teach many central banks in emerging markets a lesson when it comes to monetary policy and how to do it in a credible and appropriate way,” said Paul Greer, a portfolio manager at Fidelity International in London, adding that he expected Mexico’s bonds and peso to do well.

Reporting by Anthony Esposito and Stefanie Eschenbacher; Additional reporting by Michael O'Boyle; Writing by Christine Murray; Editing by Chris Reese and Leslie Adler

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