With five months to go in Mexico's presidential campaign, the leftist firebrand Andres Manuel Lopez Obrador has mounted a sizable lead in most polls. And yet, the country's business and financial elites seem unimpressed.
Eighty-five percent of those C-suite executives surveyed by Banco Santander last month said Lopez Obrador will be defeated in July's vote just as he was back in 2006 and 2012. This confidence explains why Mexican markets have held up so well as Lopez Obrador -- who has made "neoliberalism" enemy No.1 in his speeches for years and pledged to roll back efforts to open up the state-run oil industry -- built his lead over a pair of more conventional candidates. The peso is the best currency in all of emerging markets this year and stocks have outperformed most peers.
But in the age of one political shock after another missed by the professional class -- Donald Trump's election, the Brexit vote, Poland's increasingly nationalist stance -- this sort of complacency seems dangerous to some. And just because Amlo, as Lopez Obrador is called, came up short before doesn't necessarily mean he will again this time.
Alejandro Cuadrado, a strategist at Banco Bilbao Vizcaya Argentaria, cautions the peso could weaken 7 percent from current levels if Amlo is leading in the days before the vote. Exotix, a research firm that specializes in the riskiest assets, says an election win could prompt a 15 percent selloff in the benchmark stock index and boost local bond yields by 4 percentage points.
"I don't think investors are prepared," said Rafael Elias, the head of Latin America credit research at Exotix. "You have to start looking at the polls seriously."
The most recent voter surveys show Amlo has a significant advantage. He's garnering 40 percent support, ahead of PAN-led party alliance candidate Ricardo Anaya with 31 percent and former Finance Minister Jose Antonio Meade of the ruling PRI party with 20 percent, according to Bloomberg's Poll Tracker.
The rise of Amlo, a former Mexico City mayor, comes amid a resurgence of discontent against the PRI and President Enrique Pena Nieto over corruption allegations. At the same time, Trump's threats to dismantle the North American Free Trade Agreement and curtail immigration are stirring national pride in Mexico, a dynamic that favors Amlo amid his pledges to reset the relationship with the United States.
Of course, there are still months to go before the election and official campaigning can't even begin until parties officially nominate their candidates by the end of March. The candidates are also slated for three debates beginning April 22. And Amlo -- who already enjoys wide name recognition -- may see his prospects dwindle as voters become more familiar with his rivals.
-- Information for this article was contributed by Eric Martin of Bloomberg News.
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