Published On: Wed, Oct 4th, 2017

Political risk rising In Mexico as López Obrador looks locked in: FORBES

It’s still 8 months away, but the market is treating the July 1 elections in Mexico as a win for populist firebrand Andrés Manuel López Obrador, better known as AMLO.

The peso is erasing the gains it’s made since Trump was elected…after getting clobbered because Trump was elected. And now consensus is that the peso will weaken further. That’s because political risk is only a few months away from kicking into high gear.

Pretty much every emerging market fund manager believes Mexico’s institutions are strong and its central bank is predictable enough to forecast rates and forex, even under AMLO. Mexico’s Finance Ministry is a fairly straight-forward conservative institution.

AMLO could of course appoint a social welfare minded minister to the post, but the overall governing system is not expected to be changed too radically.

The president of the National Regeneration Movement (MORENA), Andres Manuel Lopez Obrador, speaks during a rally in Mexico City on September 3, 2017. / AFP PHOTO / PEDRO PARDO

Mexicans largely say that AMLO will be AMLO and not another Hugo Chavez, the deceased socialist revolutionary of Venezuela (now a broken country); nor will he be like Luiz Inacio Lula da Silva, the ex-president of Brazil and labor union rabble-rouser who may yet go to prison for his involvement in the Petrobras bribery scandal.

So who will AMLO be, and what is at stake in Mexico when he finally reveals it?


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