Western Union Company (NYSE:WU) shares continued to sink on Monday, trading as low $19.46 towards the end of the day, as investors consider the knock-on effects on WU profits due to the intensifying wave of ICE raids on illegal immigrants across the United States.
President Trump has claimed that $24 billion is remitted back to Mexico each year from illegal immigrants living and working in the United States, but remittances to Mexico have climbed even further in 2016. Last year, remittance to Mexico hit an all-time high of $26.97 billion - an increase of 8.8% compared to the $24B figure of 2015, according to BBVA Research.
While it is very difficult to estimate what portion of remittance originates from illegal immigrants within the United States, Politifact approximates that 48% of remittance across the southern border of the U.S. originates from illegals.
The Trump administration has previously said the deportation efforts are mainly aimed at illegals with criminal convictions, however, a recent report from TheDailyBeast claims that ICE agents are now raiding residential building complexes “with high concentrations of Latino residents” en masse in Atlanta, Phoenix, Charlotte and Austin.
On Sunday, President Trump responded to the raids on Twitter:
The crackdown on illegal criminals is merely the keeping of my campaign promise. Gang members, drug dealers & others are being removed!
— Donald J. Trump (@realDonaldTrump) February 12, 2017
A sustained crackdown on illegal immigrants, many of whom use companies like WU to send money back to relatives in Mexico, has the potential to disrupt the remittance industry and affect the profits of many cross-border payments providers.
There is also some new data that shows institutional appetite for WU stock has been in decline since the second quarter of 2016. Institutional inflows into WU slowed down to a paltry $73.3m in Q4 of 2016 - the lowest reading since Q3 of 2015, according to a report by the TheCerbatGem.
Western Union shares closed on Monday with a loss of 1.01 percent at $19.54.
WU sign photo by Paul Bischoff
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