COVID-19 is Infecting Global Markets and the Mexican PesoBy Ricardo Guzman | Fri, 02/28/2020 - 18:44
Markets kept sliding amid the COVID-19 (coronavirus) outbreak. With the sounding of the bell to close the Friday’s trading at the NYSE, one of the most turbulent weeks in global stock markets in recent history was finally over However, the panicked reactions of some investors are still ongoing and uncertainty on how investors will react will linger until Monday.
The Mexican peso is still losing ground against the US dollar and even broke the 20 pesos per dollar barrier at some points. This places the Mexican currency into a 5-month low at 19.77 pesos per dollar, as the country’s first coronavirus case was confirmed. After negative results in the week, Mexican Stock Exchange IPC was down 0.68 percent.
Among global stock markets the negative trend continued for the seventh consecutive day on Friday, with shares in the US tumbling following steep declines in Asia and Europe.
The S&P 500 index was already down 12 percent by Friday following a record high achieved just last week, and ended the day by recording one of its worst weeks since the 2008 financial crisis.
Steep drops in Asia and Europe on Friday followed Thursday’s 4.4 percent drop in the S&P 500 index which marked the worst day for American shares since 2011. In Europe, the UK’s FTSE 100 fell more than 3 percent and Germany’s DAX lost almost 4 percent.
Asia was not left behind. Japan’s Nikkei 225 closed down 3.6 percent, the KOSPI in South Korea dropped 3.3 percent while Shanghai Composite in China lost 3.7 percent.
While the health of stocks and the peso offered grave reading, a window of opportunity could be opening for Mexico. US textile supply chains effected in China due to the COVID-19 outbreak are opening new export opportunities for Mexico’s apparel industry, particularly for knit fabric apparel like socks, sweaters, underwear and t-shirts, said industry experts quoted by Reforma.
Mexico is the eighth largest client for US textile importers , far behind China which takes up poll position. The strong Mexican textile sector, its geographic location and the free trade agreement benefits are the main assets to take advantage in this landscape.
Brands will have to find providers and that’s where the Mexican apparel industry can reposition itself among American buyers, former head of Mexican apparel association Raul García said.