As stock markets around the world plumetted Thursday on widespread fears of a double-dip recession, the Mexican Bolsa sank more than 3.5% to 33,322 units, its lowest level since September 2010 and the main indicator’s worst fall since June 22, 2009. The IPC index was dragged down by a wave of selloffs of risk assets, as the ghost of recession scared away throngs of investors.

The weak economic figures announced in the United States, along with a worsening debt crisis in Europe, spooked investors in a context in which another global recession seems increasingly likely. At the Bolsa, four consecutive drops accumulate a loss of 7.44%, bringing the year’s total setback to 13.56%. In Thursday’s session, there were an unprecedented number of 92,255 operations, compared to the most recent generalized plunge, occurred on March 2, 2009 when the indicator fell 4.63% and operations reached 24,572.

With sell orders at an all-time high, 77 of the Bolsa’s 98 traded stocks posted losses, nine showed advances and 12 remained unchanged. Among the Bolsa’s heavyweights, mobile carrier América Móvil shares lost 2.43%; retailer Walmex retreated 3.02% and miner Grupo México lost 3.33%, with other minor players suffering steep losses.

US Slowdown Hurts

The Mexican economy could feel a severe impact from the U.S. economic slowdown in the fourth quarter, and the effects of spending cuts will probably become visible next year, according to financial analysts. Such an outlook leaves a thin margin for Mexican authorities to promote a strengthening of the domestic markets, as an alternate plan to the U.S. slowdown, said Arturo Vieyra, who coordinates the Banamex Department of Economic Studies.

Vieyra and other analysts feel that the Mexican economy has shown signs of consolidation since a year ago, a trend that should facilitate a more balanced growth next year, where consumption and domestic investments will play a greater role in the overall economy.

Delia Paredes, an economist at Ixe stock brokerage, says it will be difficult for Mexico to reach the anticipated 4.5% GDP growth this year, and finetuned her own estimate downward to 4% from 4.5%, which is still far too optimistic to other analysts, as is Vieyra’s own forecast of 4.8%.

Manufacturing Slows

Mexico’s manufacturing sector posted its sharpest drop since Novemner 2008 in July, as a direct result of its steep dependence on the U.S. manufacturing industries, and the setback has the potential of extending to the services sector, according to a report by the Mexican Institute of Finance Executives (IMEF). In July, the IMEF Manufacturing Index fell 3.1 points to 50.4 against June, while the IMEF Non-Manufacturing Index edged down 0.1 point to 52.5 points.

The monthly IMEF indicators range from 0 to 100, and the 50-point mark reflects the threshold between expansion and contraction, but the indicators do not furnish specific data on the magnitude of the fluctuations that are anticipated. “This (manufacturing) result suggests that manufacturing activity in Mexico has begun slowing down, following the slowing trend in the United States in the past several months,”, says the IMEF report.

The U.S. manufacturing index for April.May and May-June shows virtually no advances, and the indicator provided by the Institute of Supply Management shows from a survey of purchase managers that manufacturing in July dropped from 55.3 the previous month to 50.9.

Capital Inflow Up

The turbulence in the global financial markets, along with the U.S. Congressional upheaval over the debt ceiling negotiations, meant for Mexico a greater inflow of foreign capital, particularly to Mexican debt instruments, according to Mexican Stock Exchange chairman Luis Téllez. During his introduction of the second phase of integration between the BMV and the Chicago Mercantile Exchange, Téllez said it had been a show of irresponsibility to take negotiations to the last hour, because the delay hurt global financial markets as well as T-bonds.

Despite the various and varied impacts, Téllez said the net capital inflow during the first three weeks of July exceeded US$5 billion. The vast majority of the foreign capital that arrived in Mexico during that period went directly into Mexican sovereign bonds, he said.

Elsewhere, as he unveiled mediocre employment figures, Finance Secretary Ernesto Cordero, an early presidential candidate for next year’s contest, claimed that in Mexico there are no indications that we could be facing a crisis like in the past, over global financial upheaval. He acknowledged, however, that no nation is thoroughly protected against global economic turbulence, and that Mexico is well prepared.

Also, check out the following opinion columns:

“Rich and Powerful”, by Marco Mares

The Mexican government is about to issue a ruling on the duel of titans for Mexico’s chicken market. In September, the Economy Secretariat will determine the advisability of applying compensatory tariffs on imports of U.S. chicken legs and thighs. It’s a new chapter of the ancient battle among Mexican producers and importers-exporters. Since last year, major producers such as PATSA and Buenaventura requested an anti-dumping probe on U.S. chicken imports. In the other corner are Pilgrim’s Pride and Tyson, the biggest importers today, along with major U.S. exporters and the U.S. government. For Mexico’s authorities, the complexity of the case resides in the difficulty in proving dumping. At any rate, the investigation must be based on the guidelines of the North American Free Trade Agreement, which have not been updated in terms of sanitary rules.

“The Great Depression”, by Enrique Campos

So this is what a financial earthquake feels like. The Dow Jones industrial average has lost more than 10% in two weeks, meaning that it’s simple a hunch that things could get worse. The indicator had not experienced a fall of this magnitude since the onset of the subprime crisis in 2008. The least you could hear about this Black Thursday is that it was a bloodbath in which there was no escape, for even the safest of havens, gold, suffered negative consequences. As late as Wednesday, markets held out hope that there might be an unreported stash at the Fed to perform the miracle of keeping a weak recovery moving along. But it was not to be, and now it’s a free fall. This morning, as the U.S. announces that non-farm job creation is going nowhere, fears will only be componded. There is a great deal of attention on the U.S. economy, which Washington is only to blame for attracting, but there’s also the European debt crisis. Rating firms are right when they say there’s no risk of a U.S. debt downgrade in the immediate future, because the risk really lies in all the other economic agents.

“Strongbox”, by Luis Miguel González

This 2011 feels like 2008. What did we learn from that fateful year? The players have changed, but many things are the same, beginning with the inability of governments to find answers. Yesterday we heard a crack, and it was no surprise. We’be been hearing cracks for a while. More than a black Thursday, it should be Black Summer. The blackness started with the Greek drama, followed by the debt ceiling talks. The U.S. slowdown is a fact, and a double dip has 35% chances, says Bank of America. Spain and Italy are up in the air. It’s not clear how the U.S. could avoid a double dip. The economy is weak and politics are the theater of the absurd, so there is the growing likelihood that Uncle Sam will have to tread a long tunnel of near-zero growth rates. No dount about it, hard times are coming.

rmena@eleconomista.com.mx