By Otto Rock
I’m a little late to this December 20th report (travelling and Christmas and all that), but a kind soul put it in front of my eyes on Twitter this morning and here’s the header:
Have a read of that, then feel free to compare that to the IKN take on the whole Mexico mining political risk AMLO hoo-hah as published back in November (when the whole thing was kicking off and caused mining stocks to drop). You can find that right here and there are several angles examined, but here’s how the piece concluded:
The bottom line is that I am less worried about the future of mining in Mexico than the panic sellers of last week. I’m also highly suspicious of the lack of depth shown by sell side analysts on the subject, especially those in the larger firms (Morgan Stanley and Citi are two of the large entities that helped spread the unalloyed fear last week) who should have the depth of knowledge to advise their clients better. However, I am not a knee-jerk buyer of the beaten-down stocks because a) the fear-mongering could go on for a while and b) even though the worst of the law project is unlikely to make it into law there is plenty of evidence to show that the Napito-driven mining scene in Mexico is going to see changes, first and foremost in better pay deals for workers. That means higher costs for the companies. And a final point; aside from the passive exposure via Sandstorm (SAND) (SSL.to) which is something I am happy to take, the IKN Weekly ‘Stocks to Follow’ list has had no Mexico exposure for quite some time. That is not a coincidence, but in 2019 that may change once the new rules are established.
Don’t say you weren’t warned.
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