![Mexico Mexico](https://cdn-www.bnamericas.com/img/flags/MEXICO.jpg)
Morgan Stanley, Fitch wary of Mexican risk of judicial reform
![Morgan Stanley, Fitch wary of Mexican risk of judicial reform](https://cdnimg.bnamericas.com/oopqCgOyVYPGBvaInbuRxkmikjmhQlKzQUSuTInJZbejGwjoqQqrtPrwxBnYXbLk.jpg)
US bank Morgan Stanley and Fitch Ratings warn that Mexico faces financial risks from the judicial reform proposed by the government given the likely qualified majority that the ruling Morena party and its allies are expected to have in congress.
The preliminary congressional election results indicate that Morena and partner parties may secure enough plurinominal seats to give them the legislative power to pass constitutional amendments.
The final composition of congress is due to be announced by electoral authority INE on Friday, August 23.
If Morena can gain a qualified majority, it will be significantly more likely that the package of constitutional reforms presented by President Andrés Manuel López Obrador (AMLO) in February, including a reform of the judiciary, will be passed in September when the new ordinary period of sessions begins in congress and before president-elect Claudia Sheinbaum takes office on October 1.
“We downgrade Mexico to UW [underweight) following the Judicial reform proposal the Executive sent to Congress. We believe replacing the judicial system should increase risk, Mexico's risk premia and limit capex. That's a problem as nearshoring is reaching key bottlenecks,” Morgan Stanley said in a report to investors.
The draft reform, which has generated significant resistance from the private sector, proposes electing all judges, magisters, and ministers by popular vote and establishing new rules for judicial proceedings.
“We lower the weight of key holdings in the country such as Walmex, Femsa and Coca-Cola Femsa, and delete Kimberly Clark Mexico, Laureate and Qualitas,” Morgan Stanley added.
Meanwhile, Fitch Ratings also noted that the government's congressional majority could allow it to secure approval for constitutional reforms.
“The congressional election results have brought back AMLO’s push for 20 constitutional reform initiatives to the forefront, which were initially submitted in February 2024. The package includes modifications to the judiciary and electoral institute, a pension reform, modifications to the minimum salary and disappearance of autonomous regulatory entities,” the rating agency said.
Fitch expects the president to benefit from Morena’s dominant position in congress, given the month-long delay between the newly elected legislators taking office on September 1 and Sheinbaum’s inauguration a month later.
According to Fitch, if approved without modification and swiftly implemented, these reforms may negatively affect Mexico’s institutional quality and checks and balances. “We believe these reforms would, overall, negatively affect Mexico’s institutional profile, but it is too early to gauge the potential severity prior to approval and implementation.”
“A downside risk from these reforms would be their potential to undermine investment and business confidence by severely affecting the rule of law. However, we do not foresee such effects occurring to a significant extent in the near term,” Fitch added.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Mexico)
![Mexican mining activity jumps in July, now up for 7 consecutive months](https://cdn-www.bnamericas.com/img/sectors/politicalriskmacro_2.jpg)
Mexican mining activity jumps in July, now up for 7 consecutive months
Raúl García Reimbert, president of the College of Mining Engineers, Metallurgists and Geologists (CIMMGM), explained that mining companies are tryi...
![Slowing inflation opens the door to a new rate cut in Mexico](https://cdn-www.bnamericas.com/img/sectors/politicalriskmacro_1.jpg)
Slowing inflation opens the door to a new rate cut in Mexico
The latest inflation figures were below the consensus forecast of analysts.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Planta Fotovoltaica Talhado 6
- Current stage:
- Updated:
1 hour ago
- Project: Planta Fotovoltaica Talhado 5
- Current stage:
- Updated:
1 hour ago
- Project: Planta Fotovoltaica Talhado 4
- Current stage:
- Updated:
1 hour ago
- Project: Planta Fotovoltaica Talhado 3
- Current stage:
- Updated:
1 hour ago
- Project: Planta Fotovoltaica Talhado 2
- Current stage:
- Updated:
1 hour ago
- Project: Planta Fotovoltaica Talhado 1
- Current stage:
- Updated:
1 hour ago
- Project: Las Lomas Solar photovoltaic project
- Current stage:
- Updated:
2 hours from now
- Project: San Bartolomé hydroelectric project
- Current stage:
- Updated:
2 hours from now
- Project: Route 101 interchange with 102
- Current stage:
- Updated:
17 hours ago
- Project: Construction of Tintal Ave. - Alsacia Ave. - Constitución Ave. - Bosa Ave. Lot 3 (Guayacanes Avenue)
- Current stage:
- Updated:
14 hours ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: BBE & Asociados S.A.
- Company: Tenaris OCTG
- Company: Eni México S. de R.L. de C.V.  (Eni México)
-
Eni México S. de R.L. de C.V., a subsidiary company of the Italian energy production firm Eni, was established in 2015 in the City of Mexico to explore and produce oil and gas. ...
- Company: Carso Infraestructura y Construcción, S.A.B. de C.V. (CICSA)  (CICSA)
-
Carso Infraestructura y Construcción (CICSA) is a Mexican company belonging to Grupo Carso's infrastructure and construction division. The firm is involved in the development of...
- Company: Alvopetro S.A. Extração de Petróleo e Gás Natural  (Alvopetro Brasil)
-
Alvopetro S.A. Extração de Petróleo e Gás Natural, a subsidiary of Brazil-focused oil company Alvopetro Energy Ltd., is engaged in the development and production of oil and othe...
- Company: Argencobra, S.A.  (Argencobra)
-
Argencobra S.A. is a subsidiary of Spanish Grupo Cobra, part of the Spanish construction giant Grupo ACS. Its activities are focused on construction, maintenance and repair of e...
- Company: Concesionaria Ruta del Cacao S.A.S.  (Concesionaria Ruta del Cacao)
-
Concesionaria Ruta del Cacao S.A.S. is a consortium made up of Cintra Infraestructuras Colombia S.A. (40%), Ashmore Group plc (30%) and Colpatria (30%). In 2015, it was awarded ...
- Company: Mitsubishi Corporation  (Mitsubishi Corp.)
-
Japan's Mitsubishi Corporation (MC) is an international conglomerate that develops and operates in the sectors of natural gas, industrial materials (carbon, steel, performance m...