Stimulus package on steroids

We always get ambitious five-year plans in the first year of a new Presidential administration (which runs six years).  They never seem to come to completion… certainly not within five years… but what a hell of a stimulus package.  And passenger trains returning to Mexico?  WHoooo-hoooooo!

News that the Peña Nieto administration will be spending heavily to build and upgrade new highways, ports, airports, rail lines and telecommunications infrastructure should be a boon to the country’s construction and building industries.

Eduardo Garcia and Pa Kwan Yuk, Financial Times (subscription required):  Mexico Brings out the big bazooka

Some of the projects the government is contemplating pouring resources into are: three new passenger train lines (including about 600 Km of high-speed rail, a line linking Mexico City and Queretaro as well as one linking Cancún and Mérida), 15 highways, seven ports and seven airports.

According to Lizbeth Diaz of Reuters:

The government also restated its desire to close Mexico’s “digital gap,” although details were thin.

Only about 20 percent of the population has a broadband subscription and just under 40 percent has Internet access.

Including investments by state-run energy and water companies, infrastructure spending during his six-year term could reach 4 trillion pesos, Pena Nieto said, though he did not detail plans for energy sector spending.

Among the government’s other plans were two new satellites to be put in orbit, a tender process for two new national television networks and 15 new highways.

A couple of other things worth noting. The foreign press, especially the business press, is trying to spin the fate of the whole package around “energy reforms” by which they mean privatization of Pemex. Which may or may not happen, and doesn’t have much popular support, and is likely to be resisted. Not that the stimulus necessarily depends on that… nor that every one of the developments will even be started. I did notice that the ports were mostly meant for export and trans-shipping… while I have long through (with AMLO) that the country needs to focus on internal markets rather than continuing to depend on exports to the United States.

The Financial Times mentions several large Mexican firms that are most likely to benefit from state spending — CEMEX (of course) as well as construction giants Empresas ICA and Grupo Mexicano de Desarrollo and project management firms IDEAL (owned by… who else… Carlos Slim) and Pinfra — and whose stocks were all up on the news of the five-year plan. Spanish-owned OHL México also saw a rise in its stock prices on speculation about the project. Presuming that money will flow to domestic firms, or those with a strong Mexican presence, one might want to keep an eye on Canadian-owned Bombardier (which supplies trains to Mexico City and has production facilities in country) and cable/communications firms (Telmex, Axtel, etc.)