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The Merger Between Security and BICE Has Received Approval From Antitrust Authorities in Chile

(LinkedIn) Fiscalía Nacional Económica (FNE) de Chile

The merger between financial groups BICECORP and Grupo Security is getting closer to becoming a reality. The most recent milestone was the approval from the National Economic Prosecutor’s Office (FNE), one of Chile’s entities overseeing competition matters. With this, the companies are now awaiting the green light from the Financial Market Commission (CMF) to kickstart their Public Tender Offer (OPA).

According to a statement, the FNE released its report on the merger, approving the integration of both financial groups—which operate in banking, investments, and insurance—without conditions. This means the companies are not required to implement any mitigation measures.

In their public statement, the groups described the approval from the Prosecutor’s Office as “a very important step in the regulatory stages required for the integration of both entities.”

The next key event is the CMF’s approval, which is currently reviewing the integration operation. Once the regulator gives its approval, BICE and Security will announce the next steps, including the specifics of the OPA that will finalize the transaction.

Both firms emphasize that their merger is a “unique project” in the Chilean financial market. “We are convinced that this union will add value and bring significant benefits to our clients, which will translate into a greater product offering with excellent service that complements the financial solutions we provide, helping us continue to be a driving force for the country’s development and its business system,” they stated in the press release.

They further stressed that the integration “will position the new entity as a significant player in terms of loan volume, fund management, and insurance in Chile.”

In the asset management business, BICE and Security are primarily focused on mutual funds. Data from the Mutual Fund Managers Association (AAFM), which includes figures across all strategy categories as of last Friday, shows that BICE manages 4.459 trillion Chilean pesos (4.827 billion USD), while Security manages 3.254 trillion Chilean pesos (3.523 billion USD).

Both financial groups announced their merger earlier this year. At the time, they projected that the resulting company would have a total economic value estimated at 3.13 billion USD, with total assets of 37 billion USD and more than 2.4 million clients.

Growth or Value: Who Benefits More From the Fed’s Interest Rate Cuts?

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The interest rate cut made in September by the U.S. Federal Reserve (Fed) is marking a shift in market trends heading into the final quarter of the year. According to some international asset managers, while the move is gradual, the beginning of the global shift in monetary policy could be accompanied by the end of the leadership of technology stocks and cash.

This is the interpretation from Allianz GI, for example, whose fourth-quarter outlook suggests that we may be entering a period of below-potential growth, where downside risks will naturally increase. “After a period of relative calm in the markets, despite some spikes in volatility, investors should be prepared for a possible return of structural volatility in 2025,” they state at Allianz GI.

Despite their cautious tone, Allianz GI clarifies that these early signs should not be interpreted as a negative signal for equity markets. “As inflation and interest rates decrease, this trend is likely to be positive for quality and growth stocks. We expect these styles to register better returns in the coming months. Volatility is likely to rise in the final stretch of the year, especially considering the U.S. elections in November, so it could be a good time to carefully consider some defensive positions to balance portfolios,” says Virginie Maisonneuve, Global Chief Investment Officer of Equities at Allianz GI.

For Chris Iggo, CIO Core Investment Managers at AXA Investment Managers and Chairman of the AXA IM Investment Institute, “the bull market could extend well into next year.” In his opinion, the Fed is doing a great job, and market prices should reflect the weighted probability of all potential outcomes. “We do not know the likelihood of abrupt changes in market confidence, erroneous economic data, or the impact of the upcoming U.S. elections. If markets are rational, the current price is the best of prospects. Betting against that could be risky,” Iggo says.

In fact, he believes that most investors should be more satisfied with growth equities now that interest rates are heading toward 3%. “It is better to own equities when analysts confidently revise upward their earnings-per-share expectations than when rate hikes threatening a recession cut forecasts, as happened in 2022,” he argues.

Stephen Auth, CIO of Equities at Federated Hermes, explains that the Fed has realized that “it needs to start cutting aggressively to prevent a hard landing from turning into a full-blown recession,” and that “if the economy continues to slow down as we expect, there will surely be more cuts.” His main conclusion is that this new cycle of rate cuts will benefit value and small-cap companies, as opposed to growth.

“The market expects an additional 75 basis points of cuts by the end of the year, and another 125 in 2025. We see at least this much ahead. All of this is good news for value and small-cap companies, which, unlike the large cash-rich tech companies in the growth indices, primarily finance themselves using short-term interest rates. But investment flows to this side of the market will depend on the Fed continuing to act aggressively and signs suggesting that the current economic weakness is stabilizing at pre-recession levels,” he argues.

Investment Opportunities

In Maisonneuve’s opinion, UK stock valuations appear attractive and could benefit from rate cuts and political stability. Additionally, technology and small-cap companies could perform well in a rate-cutting, moderate-growth environment. She also believes that water-related stocks are good defensive opportunities in this context, as they are closely tied to a natural resource and are not influenced by the market.

“In general, we continue to pay special attention to the Asia region. Within equities, we prefer Japanese stocks due to ongoing structural reforms and the country’s recent stock market crisis, the second largest in its history. Moreover, companies are revising their profits upward, increasing dividends, and buying back shares. In China, the apparent recovery of the real estate market could act as a catalyst for stocks, which mostly trade at very attractive prices. There is no doubt that geopolitics continues to pose certain challenges, as the potential escalation of current trade tensions could affect confidence. Therefore, we expect a more favorable environment for Chinese equities in the fourth quarter of 2024,” Maisonneuve explains.

The Allianz GI expert also refers to India, where she believes the valuation premium of stocks is more than offset by the country’s strong growth. “The fundamentals are very solid, especially the region’s favorable demographics, with a large workforce and an average age of just 28 years, suggesting positive economic prospects for the coming years,” she concludes.

For his part, Iggo adds that “optimism is spreading, and equity markets are reaching new highs. The frenzy around artificial intelligence (AI) may have subsided, but the revolution is underway, and we shouldn’t rule out upside surprises in tech earnings in the third quarter and in 2025.”

The Global Housing Market Bubble Risk Decreases for the Second Consecutive Year

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Riesgo de burbuja en el mercado inmobiliario

The risks of bubbles in the real estate sector of the cities analyzed in the UBS Global Real Estate Bubble Index have decreased, on average, for the second consecutive year. According to the index, there is little evident risk of a housing bubble in San Francisco, New York, and São Paulo, which shows the lowest bubble risk among the analyzed cities. In Europe, following new declines in the index score, London, Paris, Stockholm, and Milan also fall into this low-risk category. Likewise, the bubble risk in Warsaw remains low.

On the other hand, Miami shows the highest bubble risk among the cities in this study. There is also a high bubble risk in Tokyo and Zurich, although in these cases, the index score has dropped significantly compared to last year. Additionally, there is a clear elevated bubble risk in Los Angeles, Toronto, and Geneva.

In the middle, the index reveals moderate risk in Amsterdam, Sydney, and Boston. In the same risk category are Frankfurt, Munich, Tel Aviv, and Hong Kong, after significant reductions in imbalances. Vancouver, Singapore, and Madrid complete the group of cities with moderate bubble risk. Dubai, included in this group of cities with moderate bubble risk, recorded the highest increase in the risk score among all the analyzed cities.

Bubble Formation and Burst

Currently, inflation-adjusted housing prices in the analyzed cities are, on average, about 15% lower than in mid-2022, when global interest rates began to rise. Claudio Saputelli, head of the real estate division at UBS Global Wealth Management CIO, explains that the cities that saw the largest price corrections “are those that showed a high housing bubble risk in previous years.”

Real prices in Frankfurt, Munich, Stockholm, Hong Kong, and Paris are at least 20% below the peaks they reached after the pandemic. Vancouver, Toronto, and Amsterdam recorded significant price drops of around 10% in real terms.

Overall, the last four quarters were characterized by weak housing price growth. However, significant corrections continued to be recorded in Paris and Hong Kong. On the contrary, in the most sought-after areas of Dubai and Miami, housing prices continued to rise. Additionally, in some cities with a severe housing shortage, such as Vancouver, Sydney, and Madrid, real prices rose more than 5% compared to the previous year.

Housing Shortage as a Stabilizer

On average, a skilled employee in the services sector can afford 40% less living space than in 2021, before the global interest rate hikes. Current price levels do not seem sustainable given the prevailing interest rate levels, especially in markets with high homeownership rates.

However, a significant deterioration in affordability does not necessarily lead to price corrections. The growing housing shortage, reflected in rising rental prices, helped stabilize many urban housing markets. Real rental prices have increased by an average of 5% in the last two years, outpacing income growth in most cases. In most of the analyzed cities, rental price growth has even accelerated over the last four quarters.

The UBS study reveals that supply is offering no relief, as high interest rates and rising construction costs have been major burdens on housing construction. Building permits have declined in most cities over the past two years.

A Certain Relief in Sight

Housing market dynamics are set to improve. Rising rental prices support the demand for homeownership in urban areas. The fall in interest rates will make the cost advantage of ownership clearly lean toward buying. First-time buyers will return to the market as affordability improves. Matthias Holzhey, lead author of the study at UBS Global Wealth Management, concludes that real housing prices in many cities “have bottomed out” and adds that it is likely that “economic prospects will determine whether prices surge again or evolve more laterally.”

UBS Global Real Estate Bubble Index: Overview, 2024

Regional Outlook

In Europe, London’s real estate market has lost a quarter of its value since its all-time high in 2016. More interest rate cuts are expected from the Bank of England, which could rekindle housing demand, especially as rents are also rising. Forecasts for the prime market seem a bit bleaker, according to the study, as uncertainty over unfavorable tax regimes for the wealthy could undermine demand in this segment.

Real estate prices in Warsaw skyrocketed nearly 30% between 2012 and 2022. Solid employment prospects, metro expansions, and modern developments have kept the market attractive for new residents and buy-to-let investors. A new government subsidy program triggered another buying frenzy in 2023. However, the price dynamics are expected to slow down in the coming quarters, according to the study.

Both Frankfurt and Munich showed very high housing bubble risks back in 2022. Since then, the rise in mortgage rates has caused both markets to drop, with real estate prices falling by 20% from their respective peaks. The forecast for interest rate cuts, combined with supply shortages, should trigger a price recovery.

Backed by falling mortgage rates and strong international demand, real prices in Paris rose by 30% between 2015 and 2020. Emigration, lending restrictions, rising mortgage rates, and an increase in property taxes have curbed demand. With a 10% inflation-adjusted drop in the last four quarters, Paris was the weakest real estate market in Europe among all the cities analyzed in the study.

Regarding Switzerland, buying a home to live in Zurich now costs almost 25% more in real terms than it did five years ago. In the last four quarters, the Swiss city also experienced one of the largest rent increases among all the cities analyzed in the study. The proportion of owner-occupied homes is decreasing, as new buildings are often marketed as buy-to-let properties. Due to the very limited inventory of owner-occupied homes in Zurich, these will increasingly be seen as a luxury good.

Middle East

Driven by falling interest rates and the growing housing shortage, real estate prices in Tel Aviv tripled between 2002 and 2022. The rise in mortgage rates ended the boom two years ago, and demand shifted to the rental market. As a result, real prices fell by 10% by the end of 2023. However, housing transactions began to recover in 2024 due to the fear of missing out on the trend, despite security concerns.

After a seven-year price correction, the bubble risk signal in Dubai was low in 2020. Since then, transaction figures have set new records each year, and the oversupply has been absorbed. In the last four quarters, real estate prices increased by nearly 17% and are 40% higher than in 2020. The report states that a high proportion of unforeseen (likely speculative) transactions and the large volume of new supply could trigger a moderate price correction in the short term.

Asia-Pacific

In the last four quarters, real estate prices in Hong Kong registered a double-digit decline. Inflation-adjusted, housing prices are back to levels not seen since 2012. The number of transactions plummeted, and mortgage growth stalled. Strong economic growth and falling interest rates should support demand next year.

In Singapore, rental prices have outpaced housing prices over the past five years, driven by the influx of global talent and construction delays. Last year, however, real rents fell by 7%, while prices rose by 3%. High interest rates and the reduction of supply bottlenecks have increased unsold inventories, suggesting moderate price inflation in the future.

Due to high interest rates, Sydney is currently the second most unaffordable city in the study, surpassed only by Hong Kong. However, inflation-adjusted prices increased slightly over the last four quarters and are only about 10% below the 2022 peak in real terms. The resilience of prices is mainly due to the acute housing shortage.

Real estate prices in Tokyo have risen around 5% in recent quarters, continuing the trend of previous years. In the last five years, housing prices have risen more than 30% in inflation-adjusted terms, more than double the rate of rent increases. Tokyo has one of the highest price-to-income ratios among all the cities in the study.

Americas

High inflation over the past two years has significantly reduced imbalances in Canada’s housing market. Despite lower affordability, the housing market has held up well. In inflation-adjusted terms, purchase prices in both Toronto and Vancouver are only slightly below the levels of three years ago.

After a prolonged period of weakness, housing prices in São Paulo have risen slightly for the second consecutive year in inflation-adjusted terms. However, real prices are still more than 20% below the peak they reached at the end of 2014. Renting remains financially more attractive than homeownership due to very high interest rates. As a result, rents soared by nearly 10% in real terms over the last four quarters.

The homeownership market in the United States is becoming increasingly less affordable, as the monthly mortgage payment as a percentage of household income is much higher than it was during the peak of the 2006-2007 housing bubble. Despite its low affordability, housing prices in New York have not corrected drastically. They are only 4% below 2019 levels and have even risen slightly in the last four quarters.

Boston’s real estate market has seen a 20% price increase since 2019, outpacing both the local rental market and income growth. However, the local economy has recently suffered, with layoffs primarily in the tech and life sciences sectors, which could change this trend.

Driven by the luxury market boom, prices in Miami have increased by nearly 50% in real terms since late 2019, with 7% of that occurring in the last four quarters. In contrast, real housing prices in Los Angeles have barely risen since mid-2023. Due to declining economic competitiveness and the high cost of living, Los Angeles County’s population has been decreasing since 2016. Consequently, rents have not kept pace with consumer prices.

San Francisco’s real estate market is showing signs of a turnaround. After real prices corrected by 8% last year, they remained stable over the last four quarters. The stock market boom and falling interest rates have already begun to revitalize the luxury segment, and sales are increasing.

U.S. Consumer Confidence Fell in September

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The Conference Board Consumer Confidence Index® dropped in September to 98.7 points, down from 105.6 points in August, the organization reported in a statement.

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell by 10.3 points to 124.3 points. The Expectations Index, which reflects consumers’ short-term outlook for income, business activity, and the labor market, decreased by 4.6 points to 81.7, but remained above 80, which could indicate expectations of a recession.

“The September decline was the largest since August 2021, and all five components of the Index deteriorated. Consumers’ assessments of current business conditions turned negative, while views on the current labor market softened further. Consumers also became more pessimistic about future labor market conditions and less positive about future business conditions and income,” said Dana M. Peterson, Chief Economist at The Conference Board.

Peterson added that the drop in confidence was more pronounced among consumers aged 35 to 54.

She also noted that, as a result, in a six-month moving average, the 35 to 54 age group has become the least confident, while consumers under 35 remain the most confident. Confidence declined in September across most income groups, with consumers earning less than $50,000 experiencing the sharpest drop. In a six-month moving average, consumers earning over $100,000 remain the most confident.

“The deterioration of key index components likely reflects consumers’ concerns about the labor market and their reactions to reduced working hours, slower payroll growth, and fewer job openings, even though the labor market remains healthy, with low unemployment, few layoffs, and elevated wages. The proportion of consumers expecting a recession in the next 12 months remained low, but there was a slight uptick in those who believe the economy is already in recession,” Peterson added.

The proportion of consumers expecting higher interest rates over the next 12 months fell for the fourth consecutive month to 46.5%, the lowest since February 2024. The percentage expecting lower rates rose to 33.3%, the highest since April 2020. September’s written responses also included more mentions of interest rates as a factor influencing consumers’ views on the U.S. economy.

Despite the slowdown in overall inflation and a decline in the prices of some goods, the 12-month average inflation expectations rose to 5.2% in September. However, this figure remains well below the peak of 7.9% reached in March 2022.

Mentions of prices and inflation continued to top the list of written responses as factors affecting consumers’ views on the economy, though there was a slight increase in the number of respondents mentioning lower inflation. Meanwhile, consumers’ expectations for the stock market stabilized after the financial market turbulence in early August: 25% of consumers expected stock prices to fall over the next year (down from 26.5% in August), while 47.6% expected stock prices to rise (slightly down from 47.9% in August).

In this context, plans to purchase major appliances were mixed, and plans to buy a smartphone or a laptop/PC in the next six months declined. However, in a six-month moving average, plans to buy new homes and cars improved slightly. When asked about their plans to purchase more goods or services in the next six months, consumers showed a slightly higher preference for buying goods.

A new question about services in this month’s survey revealed that consumers remained willing to travel and dine out in September. It was noted that consumers continued to show a strong interest in home streaming entertainment, but interest in going to the movies had increased in recent months. Regarding non-discretionary services such as healthcare and utilities, expected spending for the next six months remained high.

In September, written responses about politics, including the November elections, remained below the levels seen in 2020 and 2016.

The Assets in Sustainable Equity UCITS Funds Have Doubled Over the Past Five Years

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Sustainable investment in Europe has become a structural part of the industry. According to the latest report, *”Sustainable Equity UCITS: Promoting Sustainable Business Models”*, published by the European Fund and Asset Management Association (EFAMA), the growth of sustainable equity funds has surged over the past five years.

The report highlights that sustainable equity UCITS represented 24% of the total sustainable funds in the European industry in 2023, compared to 15% in 2019. A significant finding is that the net assets of these vehicles have more than doubled over the past five years, increasing from €0.6 trillion to €1.3 trillion.

Moreover, despite market volatility and economic uncertainties, EFAMA notes that sustainable equity UCITS have shown resilience, with positive net inflows, particularly in 2021 when net inflows reached €231 billion. “Although net inflows were smaller in 2022 and 2023, demand for these funds remained strong compared to global trends, underscoring investors’ confidence in sustainable investments,” they point out.

The report also states that nearly 20% of sustainable equity UCITS are classified as Article 9 funds, while 70% are Article 8, reflecting cautious sentiment among investors due to regulatory uncertainties. The ongoing review of the Sustainable Finance Disclosure Regulation (SFDR) is expected to provide clearer definitions and support for transition finance.

On average, sustainable equity funds have consistently delivered positive net returns, comparable to non-sustainable equity UCITS. These funds tend to be profitable, benefiting investors with sustainability preferences.

“Sustainable equity UCITS not only encompass a wide range of sustainability themes tailored to diverse investor preferences but are also a resilient investment product with competitive returns. This makes them an attractive option for investors,” explains Vera Jotanovic, Senior Economist at EFAMA.

According to Anyve Arakelijan, Policy Advisor at EFAMA, as the regulatory landscape evolves, “we expect the sustainable finance framework to become more investor-focused, resolve inconsistencies with other EU regulations, and provide greater support for transition finance, further driving sustainable progress and achieving the EU’s long-term sustainability goals.”

Banque Hottinguer Selects RBA From the iMGP Network to Launch an Asset Allocation Fund Based on ETFs

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iM Global Partner (iMGP) has announced that Banque Hottinguer has selected New York-based Richard Bernstein Advisors (RBA) as a partner to launch and manage an asset allocation fund based on its core strategy, which has been in operation for 15 years.

Richard Bernstein Advisors is a recognized asset allocation specialist that combines top-down macroeconomic analysis with portfolio construction driven by quantitative models, using ETFs to express its views.

This launch demonstrates the interest of international investors in RBA’s sub-advised solutions and the ability of iM Global Partner to create a strategy that reflects the allocation needs of European investors.

The fund was exclusively designed by RBA and iM Global Partner for Banque Hottinguer, catering to the specific needs of its private and institutional investors. The multi-asset portfolio is composed of ETFs with exposure to global equities, euro-denominated bonds, and a small portion of commodities. “RBA seeks to generate alpha by identifying global investment styles and themes where they believe there are disparities between fundamentals and sentiment. This is very different from the traditional bottom-up approach, which aims to generate alpha through individual stock selection,” they explain.

“This partnership with iM Global Partner and RBA allows us to offer our clients unique access to international management with a center of gravity in the U.S. This solution, based on a Pactive® investment approach (active management of passive investment vehicles, ETFs), is supported by a combination of macroeconomic analysis and profit cycle research that has proven its strength and performance throughout cycles,” said Laurent Deydier, Deputy CEO of Banque Hottinguer.

Richard Bernstein, CEO and CIO of RBA, commented: “We are particularly honored to be selected by Banque Hottinguer, a historic and renowned institution, for the design of this new product. This materializes our partnership with iM Global Partner and strengthens our presence in the European market as asset allocation experts.”

Regarding RBA, the company was founded by Richard Bernstein, a former Chief Investment Strategist at Merrill Lynch & Co and a recognized expert in equities, styles, and asset allocation, with more than 40 years of experience on Wall Street. Many of the highly experienced members of the investment team have worked with Richard since his time at Merrill Lynch & Co.

“We are delighted to work with Banque Hottinguer on this project and believe it demonstrates our ability to develop new strategic partnerships and innovate through new investment solutions,” concluded Julien Froger, Managing Director – International Distribution at the firm.

Have the Opportunities in Latin American Fixed Income Disappeared With the Monetary Normalization Cycle?

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Oportunidades en renta fija en Latinoamérica

After the COVID-19 pandemic, the world faced a supply chain disruption that led to unprecedented levels of inflation. In response to the rapid increase in prices, central banks were forced to raise interest rates to historic levels to mitigate inflationary effects.

Latin America was no exception to this global trend. Countries like Brazil, Chile, Colombia, and Mexico raised their benchmark rates, often reaching double digits. This adjustment attracted investment flows into fixed-income instruments in emerging markets, with Latin America being a significant destination.

However, as inflation begins to moderate globally and with expectations of Federal Reserve (FED) rate cuts in the short term, alongside a gradual reduction of interest rates in the region as monetary policies normalize, a valid question arises: Is fixed income in Latin America still attractive?

The answer, when considering a proper balance between risk and return, is yes. Latin American fixed income remains appealing, but it is crucial to carefully select both the country and the segments of the curve that offer the most value.

In this regard, the intermediate segments of the curve in several Latin American countries continue to offer attractive interest rates with significant appreciation potential, particularly highlighting bonds in Colombia and Mexico. On the other hand, in a scenario of economic slowdown with more moderate growth, fixed income in countries like Chile provides additional protection to investment portfolios due to its lower volatility compared to other nations in the region.

Moreover, considering that, in theory, Latin American currencies tend to depreciate due to the narrowing of the interest rate differential with the United States, corporate bonds in U.S. dollars from Brazil, Chile, Colombia, Mexico, and Peru represent an interesting option. These instruments benefit both from the exchange rate effect and from a potential decrease in U.S. Treasury bond rates.

In summary, the normalization of monetary policy in the region does not eliminate the attractiveness of Latin American fixed income. On the contrary, it encourages a shift from the short end of the curve to a more balanced and diversified strategy, taking advantage of the various opportunities offered by fixed-income assets in the region.

The Masters Tournament Has Added Bank of America as a Champion Partner

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Bank of America will become a Champion Partner of the Augusta Masters Tournament starting in 2025, announced Fred Ridley, Chairman of Augusta National Golf Club and the Masters Tournament.

Additionally, Ridley announced that CBS Sports will extend the tournament’s coverage hours on Saturday and Sunday, also beginning in 2025.

Bank of America will join AT&T, IBM, and Mercedes-Benz, which have extended their relationships as Champion Partners. Delta Air Lines, Rolex, and UPS have returned as Tournament Partners.

“Through Bank of America’s support for our community initiatives and amateur events, they have become an impactful partner committed to the mission of our organization in Augusta and worldwide,” said Ridley.

Moreover, in collaboration with CBS Sports, the 2025 Masters Tournament will debut five additional hours of live coverage for the third and final rounds, bringing the total to 14 hours of weekend coverage on CBS and Paramount+, along with their digital broadcasts from Thursday to Sunday.

Bank of America has been collaborating with the Augusta, Georgia community for several years.

UHNW Investors Are Showing Greater Optimism Despite the Uncertainty Surrounding the Elections

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UHNW investors in the U.S. are feeling more optimistic about the economy and their own portfolios compared to four years ago, according to a recent UBS survey.

The survey, conducted in August 2024, found that 74% of investors feel “very optimistic” about the next six months, compared to 57% in 2020. Additionally, 55% expressed high optimism about the U.S. economy, while optimism dropped to 42% when asked about the global economy.

Despite recent economic uncertainty, UHNW investors are nearly evenly split on which candidate would better manage the economy in the future. Of those surveyed, 49% believe Harris is better for the economy, while 51% believe Trump is a better choice.

Some Investors Believe Harris Is Better for the Economy

Those who believe Harris is better for the economy cite her policies focused on the middle class, her approach to tax laws, and her preservation of the Fed’s independence.

Others See Trump as a Better Economic Leader

On the other hand, some investors think Trump is better for the economy due to his immigration policies, his stance on green energy, and his lower regulatory approach to trade.

While the economy is the number one electoral issue for investors, with 84% of respondents considering it their main concern, social security (71%), immigration (68%), taxes (69%), and healthcare (66%) also rank among their top worries.

Investors Want Help Navigating the Elections

Most investors seek guidance on navigating the elections and better understanding their impact on portfolios. A significant 78% of respondents agreed with the statement, “I want to better understand the impact of the elections on my portfolio.”

Additionally, a financial plan eases election-related uncertainty. A vast majority (92%) of those surveyed believe that “a financial plan will help me weather market volatility related to the elections,” according to UBS.

UBS surveyed 971 investors in the U.S. with at least one million in investable assets from August 13 to 19, 2024.

This Is the Economic Team That Takes the Reins of Mexico (and Their Challenges)

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This Tuesday, October 1st, a new term begins in Mexico, and for the first time, a woman, Claudia Sheinbaum, will assume the presidency of Mexico, making her the first female president in the North American region.

Fiscal stability, economic growth, and the creation of necessary infrastructure to face the challenge of nearshoring are the main challenges the economic team will face immediately as they take the reins of the Mexican economy starting on October 1st, according to analysts.

Who are the officials who, as of October 1st, will be responsible for steering the second-largest economy in Latin America and the 13th largest in the world?

Rogelio Ramírez de la O: Fiscal Consolidation as a Priority

This year, Mexico reached a fiscal deficit of 5.8% of GDP, the highest level in 36 years. This will be a decisive factor in determining the country’s credit rating, as noted by rating agencies like Moody’s.

The highest fiscal deficit in decades is the challenge for Rogelio Ramírez de la O, the current Secretary of Finance, who will continue in his position under Claudia Sheinbaum’s administration starting this Tuesday, October 1st.

In addition to fiscal consolidation, analysts consider that other challenges include a fiscal reform and fostering economic growth beyond the 2.1% average Mexico has experienced for the past four decades.

Marcelo Ebrard Casaubón: Renegotiating the USMCA, the Upcoming Battle

As of this Tuesday, October 1st, the new Secretary of Economy is Marcelo Ebrard, who served as Foreign Minister under Andrés Manuel López Obrador’s administration and ran for the presidential nomination from the ruling party.

As Secretary of Economy, Ebrard will be tasked with designing and promoting public policies to boost the country’s economic growth, as well as reviewing or renegotiating the US-Mexico-Canada Agreement (USMCA) in 2026 with the country’s regional partners, the United States and Canada.

According to analysts, this will be one of the most important challenges of the upcoming term. The trade agreement, which began 30 years ago in 1994, has been a significant economic driver for Mexico.

Before the agreement, initially known as NAFTA and now as USMCA, Mexico’s exports to the U.S. were around $43 billion. Last year, Mexico’s exports to the world’s largest economy totaled $593 billion.

The USMCA review brings many challenges for Mexico, compounded by the U.S. electoral process. While it is technically just a review of the treaty, some analysts believe it could lead to a new negotiation, depending on the U.S. economic situation in the coming months.

Victoria Rodríguez Ceja: Keeping Inflation Under Control

Though the Governor of the Bank of Mexico is not officially part of the presidential economic cabinet and cannot be removed until her term ends on December 1, 2027, she plays a crucial role in economic policy by preserving the purchasing power of the currency.

The new term looks promising for Banxico, as it has managed to steer inflation toward the target of 3% ± 1%, although estimates suggest that the goal will not be reached before 2026.

In September, Banxico resumed interest rate cuts, which analysts believe will help stimulate the Mexican economy and avoid a potential recession, though it may not be enough to prevent the current slowdown.

Jesús Antonio Esteva Medina: Infrastructure and Nearshoring as Priorities

The next Secretary of Infrastructure, Communications, and Transport (SICT) will face a significant challenge: promoting infrastructure development to make the country competitive in the context of nearshoring.

This task is complicated by a contraction in available resources due to the fiscal deficit and the funds committed to social programs, leaving little room for additional spending.

The outgoing administration scaled back physical investment spending. Data from the Ministry of Finance and Public Credit (SHCP) showed that from January to November 2023, infrastructure spending was 778.3 billion pesos, a 2.9% drop compared to the same period in 2022.

It is estimated that during the current administration, infrastructure investment fell by 30% compared to the previous government, despite emblematic projects like the Dos Bocas refinery, the Felipe Ángeles International Airport (AIFA), and the Maya Train.

Julio Berdegué Sacristán: Modernizing Mexican Agriculture

The Secretary of Agriculture and Rural Development (SADER) in Claudia Sheinbaum’s cabinet is Dr. Julio Berdegué Sacristán.

Among his many roles, he was appointed Regional Representative for the United Nations’ FAO in Latin America and the Caribbean in 2017. During his time at the FAO, he emphasized that hunger in the region is closely linked to economic inequality and the historically rigid income distribution in Latin America and the Caribbean.

Mexico ranks 12th in global food production and excels in agriculture, livestock, and fishing. Since NAFTA’s implementation, Mexican agri-food exports have grown by over 600%.

The sector’s productivity, combined with greater trade openness, has enabled Mexico to increase agri-food exports, reaching nearly $10 billion in sales in the first four months of this year and a projected total of $30 billion by year-end.

However, the sector urgently needs continuous resource injections for modernization, as many parts of rural Mexico lack the technological capacity required today.

Three Major Challenges for the Mexican Economy

Analysts agree that three major challenges could shape the next six-year term:

1. Tackling fiscal deterioration: The country must quickly return to a manageable fiscal deficit. A 5.8% deficit is unsustainable in the short term for an economy like Mexico’s.

2. Boosting economic growth: The 2.1% average growth rate over the past 40 years is no longer sufficient. Mexico needs sustained and substantial growth for decades to overcome its economic lag.

3. Infrastructure development: Mexico has a historic opportunity with nearshoring, but it must be prepared with adequate infrastructure; otherwise, the opportunity could slip away.