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 Business News | June 2007 
Mexico Markets Fall on Global Interest Rate Fears
 Reuters
| | Mexico’s Bolsa Mexicana de Valores (BMV) |
Mexico City - Mexican stocks, bonds and the peso fell sharply on Thursday as global inflation worries fueled concerns over a worldwide rise in interest rates.
The benchmark IPC stock index dropped 1.72 percent to 31,137 points, adding to Wednesday's 1.7 percent decline which was also sparked by worries that higher global rates would diminish interest in relatively risky emerging market assets.
The peso gave up 0.52 percent to 10.925 per dollar. The price of the benchmark 10-year government peso bond slipped 0.566 to bid 101.421 with a yield of 7.77 percent. The bond's yield, which moves inversely to its price, was up 9 basis points.
The European Central Bank raised interest rates on Wednesday and signaled it would tighten policy further, while New Zealand surprised overnight with its own tightening.
The rate hikes, combined with a shift in global sentiment toward inflation concern, sent yields on U.S. Treasuries sharply higher, which makes emerging market assets like Mexican stocks and bonds less attractive to investors.
"With U.S. bonds rising, the least that can happen is that capital flows toward Mexico get stopped up," said Gerardo Roman, head stock trader at Actinver brokerage in Mexico City.
Dominant cellphone operator America Movil dragged hardest on the stock index, dropping 1.43 percent to 32.50 pesos a share, while its New York-traded shares were off 1.91 percent at $59.48.
Shares of holding company Carso Telecom, used by Mexican tycoon Carlos Slim to control fixed line giant Telefonos de Mexico (Telmex), were down 4.57 percent at 58.30 pesos.
Shares of Cemex, the world's No. 3 cement maker, slipped 1.99 percent to 41.80 pesos. The company said a majority of Australian building firm Rinker's shareholders accepted its takeover offer. Its New York-traded shares were down 2.35 percent at $38.28.
Cemex said it was committed to going through with the takeover after winning 50.34 percent of Rinker shareholders ' approval on its $14 billion takeover bid. |
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