Mexico’s equities pipeline is on hold after Donald Trump’s victory in the US presidential election.

Mexico’s pipeline of trades, which includes tequila maker
Jose Cuervo’s potential initial public offering and an equity offering from
Grupo Cementos de Chihuahua, will likely be delayed until next year, according to
three equity capital markets sources.

“It is safe to say the pipeline is no longer imminent,” one
of the bankers said. “Mexico is providing the pipeline right now, but these
companies are in no rush to raise capital, especially now given the market
uncertainty.”

For Mexico’s capital markets, the second source said they
needed to know more about economic policies under a Trump presidency, before
companies could confidently move forward with equity offerings.

“There is still too much volatility, so let’s wait and see
once the dust settles,” the second banker said. “All we have to go on is Trump’s talk of repealing trade agreements and strict rules on
immigrants.”

The uncertainty alone was seemingly enough to alarm Mexico,
with the peso suffering its sharpest fall since the 1994 Tequila crisis. Early
on Wednesday the peso was recording over MXN20 ($1.008) for every dollar, but it settled throughout the afternoon and traded at MXN19.83 per dollar
later in the day.

Equity investors reacted immediately. Inflows into the US
grew, while emerging market investors fled.

“Cuervo’s comparables are down all from the investor worry,”
the third source said. “Money from outside the US is coming back, making deals
in Latin America harder to execute.”

A weaker peso is likely to put upward pressure on interest
rates and slow down foreign direct investment. Fixed income investors may also reconsider their overweight positions on Mexican securities, according to
analysts from Morgan Stanley.

Impacts on NAFTA

Trump’s victory also raises doubts over the future of the
North American Free Trade Agreement (NAFTA). The trade agreement provides a
framework for integrated and interdependent manufacturing trade between the US
and Mexico.

Mexico’s sends more than 80% of its exports to the US, while
the US is the leading provider of FDI into Mexico, a report from Fitch showed.

Trump’s calls to change or end NAFTA add to the uncertainty in
Mexico’s trade and capital markets.

Jaime Reusche, a senior sovereign analyst at Moody’s said
any changes that materially disrupt trade or financial flows would be credit
negative for Mexico. The country would also be vulnerable to a slowdown in FDI
from the US, Reusche said.

One of the sources said export-oriented businesses or hotel
and property operators, with dollar-denominated revenues, could find an
opportunity to raise capital in the coming months.

“The election result, no doubt, puts everything on hold,” he
said. “But sector-specific opportunities will arise, especially those that
benefit from currency risk.”