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 Business News | June 2006 
Mexican Stocks Surge Back but Peso Loses Ground
 Reuters
| | Mexican President Vicente Fox says the solution to illegal immigration is more jobs in his country. About 10 percent of Mexico's population now lives north of the Rio Grande, and the money they send home helps keep the economy afloat. Fox said Mexico's economy is on the upswing, with 5.5 percent growth and 1 percent inflation. Mexican factories on the U.S. border could use 100,000 workers immediately. (AP) |
Mexico City - Mexican stocks rallied on Friday, as investors took advantage of beaten down share prices to look for bargains but the peso lost ground amid nervousness about the country's tight presidential election race.
The IPC index of leading shares [.MXX] gained 1.53 percent to 19,421.73 points, up for a second straight day. The index plunged about 14 percent in sessions after May 10 when fears of rising U.S. interest rates led stock investors to sell in markets around the world.
"After the adjustment seen in recent days there are a lot of buying opportunities. Stocks are on sale," said Carlos Hermosillo, an analyst at Vector brokerage in Mexico City.
But investors are also becoming increasingly nervous about the July 2 presidential election in Mexico after new polls showed the top two candidates in a dead heat.
Conservative ruling party candidate Felipe Calderon, who is favored by investors, had pushed ahead in opinion polls. But he lost ground this month and is now locked in a tie with leftist rival Andres Manuel Lopez Obrador.
Many investors say the worst outcome for the July 2 vote would be a near draw, which could easily lead to drawn-out legal disputes.
Although Lopez Obrador has repeatedly promised to respect the results of the election if he loses, his past allegations of government conspiracies against him have led some investors to worry he may not easily acquiesce if the results are close.
That hurt the peso on Friday, sending it down 0.94 percent to 11.3545 per dollar, its weakest since January 2005.
Gains in stock trading were led by cellphone operator America Movil after Merrill Lynch upgraded it to "buy" from "neutral," saying the stock was cheap after its recent sell-off.
America Movil's local shares [AMXL.MX] firmed 2.27 percent to 19.39 pesos while its U.S.-traded shares [AMX.N] rose 2.25 percent to $34.58.
Copper miner Grupo Mexico [GMEXICOB.MX] surged 4.27 percent to 33.45 pesos despite strikes at two its two largest Mexican mines. |
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