| | |  Business News | August 2009 
Mexico Rated Top Pick for Latin Equities at JPMorgan
 Catarina Saraiva - Bloomberg
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August 20, 2009
Mexico, the worst-performing Latin American stock market this year, was ranked as the region’s top country for equities at JPMorgan Chase & Co. on the prospect of an economic recovery and legislation to trim the budget deficit.
Mexico’s Bolsa index probably will end the year at 34,000, up 6.3 percent from a prior estimate, wrote Ben Laidler, JPMorgan’s head of Latin America equity strategy, in a note to clients dated yesterday. He also raised his year-end forecast for Brazil’s Bovespa index by 8.3 percent to 65,000.
“We are overweight on Mexico, focused on the speed and timing of the U.S. economic recovery, given the high macro linkages, and on Mexican fiscal reform,” wrote Laidler, whose team was ranked as the top for Latin American equity research this year by Institutional Investor magazine.
The 35-stock Bolsa index has advanced 24 percent this year, compared with a 51 percent surge in the Bovespa, a doubling in Peru’s Lima General Index and gains of more than 37 percent for benchmark measures in Chile and Colombia. JPMorgan’s year-end estimate for the Bolsa implies a 23 percent rally from yesterday’s closing level.
Laidler favors Mexico’s industrial, financial, materials and so-called consumer-discretionary stocks on prospects of an economic recovery, and said fiscal reform likely will avert a downgrade of the country’s debt rating. President Felipe Calderon said this month that officials may propose higher taxes and lower spending to keep a lid on next year’s budget gap.
The Bovespa will gain 16 percent from yesterday’s level by year-end, based on JPMorgan’s estimate. Brazil stocks may outperform in the “medium term,” on better-than-estimated earnings and as record-low interest rates and rebounding demand for the country’s commodities boost the economy, Laidler wrote.
“Shorter-term, however, we believe Mexico remains the more leveraged and underappreciated, though higher-risk, story,” he wrote.
To contact the reporters on this story: Catarina Saraiva in New York at Asaraiva5(at)bloomberg.net. |
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