Swine Flu Roils Mexico Markets

The swine flu has hammered Mexican markets on the first full day of trading since the severity of the outbreak rose dramatically over the weekend. The Bolsa’s IPC dropped 3.3% on Monday to 21,827.11, while the MXP slid 4.0% to MXP13.76 per dollar. Research shops say it is still too early to quantify the potential economic consequences of the potential pandemic, though any sense of stability achieved by the early April announcement of an FCL arrangement with IMF has been undeniably toppled. If the outbreak results in a temporary, one-off event causing 2-3 weeks of disruption “investors can expect spreads to tighten back in and the MXP to return to MXP13.3 per dollar in the short-term, and MXP12.50 per dollar by the end of the year,” says Bulltick Capital in a Monday note. If the outbreak turns into a pandemic, Mexico’s economy would be severely affected as consumers cut spending and tourists cancel their vacations, it adds.