📝Mexico Judicial Reform Impact to Be Gradual: Natixis

Unfortunately, they will have a lot of discretion in doing so, which critics say could force rulings in favor of the Morena government. Two- thirds of the candidates are from the executive and congressional branches, both of which are controlled by the Morena party. Therefore, it is safe to say that the majority of the judges, if not all, will likely be aligned with Morena. Another risk is that the new judges may not have as much experience or the same qualifications as the previous ones.

The impact on the economy will be gradual and will take six to twelve months to be fully realized. Therefore, the impact on the MXN and interest rates will likely be minimal. Of course, there is a risk that Morena-affiliated candidates with little experience or education will become judges on the Supreme Court. This could negatively impact markets due to headline noise. However, it will likely take many months to clearly see the impact of the new judges on investment.

We believe that ultimately domestic and foreign players will adapt to the new judicial system. - Natixis