Grupo México’s Shares Show Recovery After Ferrosur Occupation

Grupo México and its subsidiary Grupo México Transportes’ shares reported significant recovery in the Mexican Stock Exchange (BMV), following the announcement of an agreement with federal authorities after the occupation of the company’s rail lines in Veracruz.  

On May 19, 2023, President López Obrador published a decree in the Official Gazette (DOF) that allowed the temporary takeover of Grupo México Transportes’ Ferrosur rail concession that goes from Coatzacoalcos to Medias Aguas in Veracruz. The concession crosses the route of the Interoceanic Corridor of the Isthmus of Tehuantepec. “The surprising and unexpected armed forces occupation of our facilities is being analyzed by the company, its investors and consultants,” Grupo México stated. 

After the occupation took place, Grupo México’s shares fell 2.9%, while Grupo México Transportes’ shares reported a 3.6% decrease. Despite the occupation, on May 24, 2023, both companies’ shares reported modest recovery after a possible agreement between the federal government and the company. At the time of writing, Grupo México’s shares reported a recovery of 5.8%, representing a nominal recovery of MX$4.53 (US$0.25). Grupo México Transportes reported a recovery of 0.74%, with its shares being traded at MX$39.26 (US$2.2). 

Similarly, López Obrador said his government is open to reaching an agreement. However, he discarded monetary compensation. “There will be an agreement, but it is not about money; it is about rights of way and concessions regarding the same routes that are under the control of Grupo México," he stated, adding that the ministers of the Interior and SEDENA are evaluating the situation. 

López Obrador stated that the 120km railway concession, which was awarded to Ferrosur in 1998, will be resolved under the concept of right of way. He explained that if Grupo Aeroportuario, Ferroviario y Servicios Auxiliares Olmeca-Maya-Mexica (GAFSAOMM), a company owned by SEDENA, needs to use Grupo México's railroad, they must pay a fee. Similarly, if Grupo México needs to use GAFSAOMM's railroad, they would also have to pay a fee. López Obrador emphasized that while they will negotiate an agreement, monetary compensation will not be possible. 

The occupation of Grupo México’s facilities alarmed Mexico’s entrepreneurs, who saw it as an attempt at expropriation. However, experts agree that the move is legal and follows constitutional processes. Nonetheless, according to the National Chamber of Industrial Transformation (CANACITRA), the fact that it is legal does not mean it does not scare away investment. “Acting hastily and taking over facilities, no matter the arguments, to accelerate the works of the Interoceanic Corridor, will generate an effect contrary to what is desired, namely attracting private investment to generate jobs, economic development and welfare to finish with inequality in one of the poorest regions in Mexico,” CANACITRA stated in a press release.