A final vote tally released over the weekend suggests Mexico's ruling leftist party and its allies would win a large majority in Congress, potentially allowing the coalition to pass sweeping changes to the Constitution.
The official count from last week's elections showed that the party, Morena, and its partners appeared on track to win an absolute two-thirds majority in the lower house of Congress.
In the Senate, it looked like the coalition would fail to achieve an absolute majority, but only for a limited number of seats, analysts say, meaning it would likely need to attract the support of only a few opposition MPs to amend the Constitution . Building these alliances “is relatively easy to do,” party president Mario Delgado said in an interview.
“We are now a dominant force,” Delgado added, “by the people's decision.”
The final composition of the legislature is not yet clear because a portion of the seats in the Mexican Congress are appointed through a system of proportional representation in August. Legal challenges could also affect how seats are allocated.
But Morena came close enough to total dominance to prompt a strong reaction from a sector the party cannot ignore: the financial markets.
In the volatile days following the election, investor alarm was on full display, with Mexican stocks struggling and the peso experiencing its worst week since the pandemic.
Concern centers on whether Morena will use his broad mandate to implement constitutional changes that critics say could weaken existing checks on presidential authority, financial analysts said.
The proposals were first presented by Andrés Manuel López Obrador and include plans to eliminate independent regulators and appoint judges and election officials by popular vote, which critics say could make them more susceptible to political pressure. Among other concerns, investors worry that upending the justice system could make getting a fair hearing in disputes less certain.
“The market feeling is that under the Morena party and with this plan on the table there could be a radical change,” said Janneth Quiroz Zamora, director of economic research at brokerage Monex. “The biggest fear concerns the possible elimination of checks on executive power.”
In what appeared to be an attempt to calm the market, incoming President Claudia Sheinbaum, a protégé of López Obrador, announced late Monday that the current Finance Minister, Rogelio Ramírez de la O, seen as a stabilizing force, would remain in the job.
“He is a great public official who provides certainty of good financial and economic management,” he said.
Ms. Sheinbaum won the presidency with the largest percentage of the vote in decades, and Morena also claimed most of the governorships on offer.
His initial comments encouraged investors that “the government has been sensitive to their concerns,” said Blanca Heredia, a political analyst based in Mexico City. This happened “largely because of the speed of the reaction,” Ms. Heredia said, stressing that the new president “needs and wants economic growth.”
But then on Thursday, Morena's leader in the lower house of Congress, Ignacio Mier, appeared to announce that the party will seek to pass the constitutional changes in September, before López Obrador steps down and Ms. Sheinbaum takes over.
The weight dropped again. Hours later, Mr Mier walked back his statement in a radio appearance in which he suggested that any changes would not be made hastily.
Ms. Sheinbaum later told reporters that the measures would be the subject of extensive dialogue. She also posted a photo of herself meeting with an executive from the investment firm BlackRock. “They are committed and excited to increase investment projects in Mexico,” she said on social media.
Mr. Delgado, the party president, said Mr. López Obrador and Ms. Sheinbaum would have to agree on how to move forward with the plans.
“These are reforms that will have to be discussed and their scope, their final version, will be defined in Congress, and the pace of their passage will be decided by the president,” he said, referring to Ms. Sheinbaum.
The result, analysts say, is that in a political system where one party has so much control, the market could emerge as a moderating force.
“I really think this adverse reaction from the market is going to cause a very thorough rethinking of what they're going to approve and how they're going to approve it in September,” said Joan Domene, a senior economist for the Latin economy based in Mexico City. America at Oxford Economics, an economic consulting firm.
Mr. López Obrador, however, did not appear discouraged. In his regular press conference on Friday morning, the president reiterated his commitment to the changes and appeared to downplay the decline in the peso, saying that “justice is above the markets.”
The mixed messages showed, analysts said, that investors' influence will depend on whether the people leading Morena – including López Obrador – actually listen to them.
“Markets are a straitjacket for politics,” he said. “But not for everyone in the same way.”
Emiliano Rodríguez Mega and Miriam Castillo contributed reporting.
