Mexican Stocks Soar to Record High
MEXICO CITY (AP) _ Mexican stocks surged 5.4 percent Tuesday to a record closing high, boosted by a stable peso, a strong performance on Wall Street and bargain-hunting by investors.
The market’s key IPC Index finished up 150.96 points at 2,929.43. The prior record close was 2,881.17 on Feb. 8, 1994, before the December 1994 peso devaluation that rocked Mexican financial markets.
``It looks like the people who left the market in December came back in a big way today,″ said one local trader. ``There was optimism everywhere.″
In addition to the other factors contributing to the rise, traders cited expectations that rates for dollar-denominated treasury bills known as Cetes will drop for a third straight week at the primary weekly auction scheduled by the central bank for later Tuesday.
The stock market’s value still remains below 1994 levels in dollar terms, however. The peso has lost 55 percent against the dollar since Dec. 20, 1994, when Mexico’s financial crisis erupted.
Volume totaled 1.10 billion pesos on 154.6 million shares traded - the ninth time in the last 10 sessions that volume topped one billion pesos.
Most market observers were surprised at the steep climb of the IPC, amid earlier predictions that the first week of January would be a fairly quiet one as market players straggled back from holidays and pondered investment strategies for 1996.
Some observers said Tuesday’s surge probably at least in part reflected more bullish economic prospects for 1996.
``We may be seeing a continuation of a rally that began about a month ago,″ said Felix Boni, director of equities research at James Capel in Mexico City.
Boni was quick to point out, however, that it was still too early to tell whether Tuesday’s rally was overdone.
Most economists estimate the Mexican economy contracted a little more than 7 percent in 1995, but they’re predicting that GDP will rally a little more than 2 percent this year as inflation pressures also ease somewhat. The government is predicting 3 percent GDP growth and 20.5 percent inflation.
Mexican stocks also finished sharply higher in New York. ADRs of bellwether Telefonos de Mexico (Telmex), the national telephone monopoly, soared 7.5 percent to $34.25.
In Mexico City, Telmex “L” series shares - those available to foreign investors - gained 64 centavos, or 5.2 percent, to 13.00 pesos.
Among other big gainers, construction leader ICA soared 13 percent, or 10.10 pesos, to 90.00 pesos.