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Capital Markets

Mexico: Election prospects unsettle investors

The potential for a López Obrador administration has hit stock markets

Obrador: His politics have frightened investors

An attempt to bar leftist presidential hopeful Andres Manuel López Obrador from running in Mexico's 2006 elections has backfired and turned Mexico City's mayor into a hero for many, and the favourite to win, much to investors' dismay. The mayor has spoken of renegotiating Mexico's debt and has pledged to overhaul the pro-market economy to benefit the poor, promising "a new economic era". Bankers and bondholders are already assuming the worst. The spectre of López Obrador as president is jangling nerves in investment houses in Mexico and abroad, and incumbent president Vicente Fox has done nothing to help the situation. In a protracted battle, Fox's government accused López Obrador, who heads the opposition PRD party, of ignoring a court order in a minor land dispute, and a state attorney began proceedings against him in April, forcing him out of the election race. The conflict provoked a run of anti-government protests. Fears of a full-blown political crisis prompted international and local investors to abandon stocks, bonds and pesos. At the height of the unrest at the end of April, Mexico's stock market fell 2.3%

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