By Carla Mozee
Mexican equities fell Wednesday, with communications stocks
among those unable to gain traction as investors booked gains from
a recent run of record highs.
Mexico's IPC index fell 0.9% to 33,517.18, giving back the bulk
of Tuesday's jump of 1.1%.
Decliners on Wednesday included the telecommunications sector,
where shares of all listed shares finished in the red. Mexican
market heavyweight America Movil (AMX) fell 1.3%, and its takeover
target Carso Global Telecom lost 1.7%. Axtel lost 1.5% and
fixed-line operator Telmex (TMX) shed 0.7%.
Itau Securities in a Tuesday note to clients said it expects
Telmex to post "weak" first-quarter operating results as the
company deals with competition from wireless, cable-TV and smaller
fixed-line companies. The broker said Telmex likely lost at least
another 50,000 voice lines during the quarter to 15.8 million.
"In our view, this weakness is highly unlikely to be offset by a
strong performance of the corporate networks and broadband
businesses where the company continues to implement an aggressive
pricing strategy in order to defend its position," wrote Itau
analyst Martin Lara.
Among broadcasters, Televisa (TV) led overall market decliners
as its shares slumped 3.2% and TV Azteca fell 0.3%. Among home
builders, Urbi fell 0.9% and Consorcio Ara lost 0.6% while Homex
(HXM) shares picked up 0.3%.
Shares of Banco Compartamos led price performers with their rise
of 1.8%, paring heftier gains. The lender late Tuesday posted
first-quarter net earnings of 400 million pesos from 288 million
pesos in the year-ago period, in part as loan portfolio rose
34.1%.
The IPC index, after a number of fresh record closes, hit its
highest closing level on April 15 at 34,134.23 as investors
position themselves to benefit from economic improvement in the
country as its largest trading partner, the United States,
continues to recover.
Mexico sends about 80% of its goods to the U.S., and Mexico is
the U.S.' second-largest trading partner.
The International Monetary Fund on Wednesday, as part of an
upgrade of its global economic growth forecast for this year, said
it now expects Mexican growth in 2010 of 4.2%, "helped in part by
the U.S. recovery." The forecast was revised upward by 0.2%.
For 2011, it sees Mexican growth of 4.5%, a decline of 0.2% from
its previous outlook in January.
Gross domestic product in Mexico slid 6.5% in 2009.
Mexico's currency rose following the report, trading at 12.176
pesos per dollar compared with 12.234 pesos on Tuesday. At the same
time, the iShares MSCI Mexico Index fund (EWW) fell 0.4%.
Growth in Latin America and the Caribbean is recovering "at a
robust pace," that's being led by strong domestic consumption and
aided by improving financial conditions, said the IMF. It now
expects growth of 4% in the region this year, up 0.3% from its
previous forecast issued in January.
The Washington-based organization pulled its forecast for
Brazilian growth up by 0.8% to 5.5% for 2010, and up by 0.4% to
4.1% in 2011.
The IMF's new global growth forecast for 2010 is 4.2%, up from
3.9%.
Elsewhere, Chile's IPSA index fell 2 points to 3,829.78 and
Argentina's Merval slipped less than 1 point to 2,453.61.
Trading in Brazil was closed Wednesday for a holiday.