Mexico’s High-Flying Stock Market Sputters With AM-Market Drop, Bjt
MEXICO CITY (AP) _ Mexico’s battered stock market recovered some of its sharp losses Thursday, ending the day with a 2.57 percent increase but still far in the hole for the week.
The Bolsa, until recently one of the world’s fastest-growing stock markets, lost 11.9 percent of its value the first three days of the week.
Market specialists blamed foreign factors and rumors for the plunge. Wednesday’s 5.89 percent drop put the market at its lowest level since Jan. 23 and was the worst since prices dropped 17 percent in one day in 1987.
″Remember we are still a young market and (these markets) are volatile,″ said Pablo Mancera of Grupo Santander, a bank subsidiary that advises the Emerging Mexico Fund, a pool of Mexican stocks that trades on the New York Stock Exchange.
″All we’re seeing is a pause that refreshes,″ said Victor L. Scarpelli, vice president of foreign equity trading at Wertheim Schroder & Co. Inc. in New York after Thursday’s advance.
″There are still people with tremendous profits in these shares,″ Scarpelli said. ″If they″re not comfortable, they’ll take a bit of profit.″
Mancera attributed the decline in part to profit-taking aggravated by concerns over the popularity of expected U.S. presidential candidate Ross Perot. Perot is against the proposed Free Trade Agreement among Canada, Mexico and the United States.
Mexican President Carlos Salinas de Gortari is banking heavily on such a treaty to force Mexican business and industry into competition with more affluent countries. Both President Bush and Democratic candidate Bill Clinton favor the agreement.
Manuel Robleda, president of the Bolsa, blamed the drop on a dependency on foreign investment. Foreign money helped make the Mexican market one of the fastest-growing exchanges in the world earlier this year, but bankers estimate foreign holders of Mexican stocks have sold off some $2 billion worth in the past two weeks.
Some sales followed rumors that the union representing Telmex, the country’s telephone monopoly, was going to sell its 315 million Telmex shares, about 3 percent of those on the market.
Union officials denied the rumor Wednesday night, the day before the upswing in closing prices.
The influential economic newspaper El Financiero said drops on the New York and Tokyo stock markets may also have contributed to the volatility here.