AMLO rail grab could hit market confidence, business group says

Mexican President Andres Manuel Lopez Obrador’s move to seize part of a rail line could damage investor confidence in the country, a major business lobby said Saturday. 

Businesspeople are “deeply concerned about the negative effects that this type of decision generates,” the Consejo Coordinador Empresarial said in a statement.

Lopez Obrador’s government on Friday declared a section of track in the state of Veracruz to be “of public utility” and transferred it to a state entity that’s building a line across the Isthmus of Tehuantepec, a relatively narrow strip of land that separates the Pacific Ocean and Gulf of Mexico. 

The rail line will eventually be operated by the Navy, according to a notice posted in the daily gazette on Friday.

The rail line was owned by billionaire German Larrea’s Grupo Mexico SAB, raising questions about how the move might impact a bid by the mining magnate to buy Citigroup Inc.’s retail bank in the country. The notice on Friday said the rail line’s owners would be compensated, without giving details.