Economy Slow Down in 3Q21; Evergrande Causes Contractions

As non-fungible tokens (NFT) begin to increase their presence, SPACs bring new business opportunities for Mexico. However, 3Q21 shows signs of an economic slowdown and the Mexican Stock Exchange was affected by the Evergrande Group downfall.

Meanwhile, unemployment withdrawals reached their highest point in 2021, after increasing for three consecutive months.

Ready? This is the week in finance!

NFTs to Take Over in the Future

Juan Montoya, Chief Co-Build Officer at Rokk3r, writes for MB about the recent massive surge of NFTs, while highlighting that these tokens might be extremely relevant in the future. “The advent of NFTs will completely reinvent the way these models work, essentially allowing any creator or community with internet access to develop a collaborative economy, where the specifics of what products, services, and assets are valuable to its members and the economic incentives tied to them are determined by the community itself, offering new opportunities for asset ownership and wealth generation.” 

SPACs Allow New Opportunities Abroad

Jeronimo Peralta, MX Managing Partner and CFO of Maquia SPAC Financial Group, explained how the company “successfully placed two SPACs in the New York international market through the Nasdaq, which has allowed Mexican investors to have access to this type of sophisticated investment instrument.” He highlighted that these types of solutions are necessary to help the Mexican market “take a step toward having a market with more investment options that are validated by international markets such as New York.”

Financial Infrastructure in Need of Transparency

Nick Grassi, Co-CEO of Finerio Connect, argued that Mexico is falling behind because of the lack of financial transparency in infrastructure. “Having a fair, transparent and seamless set of data sharing and payments infrastructure in Mexico is something that we have been waiting on since 2018 when the Fintech Law first passed.” Grassi also adds urgency to this matter as he believes, “Mexico is starting to fall far behind Brazil and even Chile, where multiple banks are now negotiating direct access to their data with fintechs.”

Unemployment Withdrawals on the Rise

Unemployment withdrawals increased for a third consecutive month according to statistics from CONSAR: in June withdrawals marked MX$1.89 billion (US$93.6 million), in July MX$1.903 billion (US$94.5 million) and finally in August they reached a peak rising to the highest amount in the entire year at MX$1.95 billion (US$97 million). However, according to CONSAR, partial unemployment withdrawals decreased for the third straight month.

Evergrande Catastrophe to Impact Mexican Stock Exchange Companies

The recent downfall of Chinese giant Evergrande Group affected financial markets worldwide, causing contractions while making companies lose value. Bloomberg data showed that Mexican companies suffered as well: “Mining companies securities underperformed the expectations of the Chinese economy and the financial situation of the real estate company.” Grupo Mexico’s papers fell 4.18 percent, while Peñoles fell 1.32 percent and Minera Frisco 2.73 percent, as those companies received the toughest blow in the Mexican Stock Exchange.

INEGI Identifies Signs of a Slowdown in Economic Recovery

INEGI’s Timely Indicator of Economic Activity (IOAE) showed signs of a slowdown in 3Q21, as experts agreed on a surge of difficulties for economic activity in this quarter. Banorte experts also highlighted more uncertainty: “Although we expect the industry to close stronger in the second half of the year, risks continue to be skewed to the downside, especially due to the permanence of the pandemic and related distortions.”