Mexican stocks ended up 0.4 percent on Friday driven by cellular phone company America Movil while the peso weakened on concerns about slower economic growth and a political scandal in Brazil.
The IPC benchmark stock index, which hit an all-time high last week, finished at 14,678.16 points while the currency eased 0.55 percent to 10.749 per dollar.
The currency has gained strongly in recent months because of rising oil prices and Mexico's high debt yields relative to US Treasuries. But investors now bet Mexican interest rates will move lower as early as next week while US rates are moving in the other direction.
"After a month of drifting between a tight trading range, the peso seems to be finally giving in to lower growth expectations and an imminent reduction of interest rate differentials between Mexico and the United States," said HSBC bank in a report.
Mexico cut its forecast for 2005 economic growth this week to 3.5 percent after sluggish US demand for car exports unexpectedly slowed expansion in the second quarter.
Political jitters in Brazil, where the benchmark Bovespa index fell 0.95 percent on Friday, also affected the peso but benefited Mexican stocks as investors shifted positions from one country to the other, market watchers said.
"Investors withdrew from Brazil looking for other more stable emerging markets, and Mexico is one of them," said Alfredo Gonzalez, a trader with Stock & Price. Cellphone operator America Movil rose 0.93 percent to 11.99 pesos. Its New York traded shares finished near flat at $22.25.
America Movil stock rose to a record high last week as investors bet the company's expansion across Latin America is not likely to ease soon. Since then, it has been consolidating with support at about 11.65 pesos.
Telefonos de Mexico, the biggest fixed-line phone service provider, gained 1.56 percent to 10.43 pesos while its American Depository Receipts firmed 0.68 percent to $19.34.
Retailer Comerci rose 2.14 percent to 14.30 pesos after Merrill Lynch raised its recommendation to "buy" from "neutral" on the back of higher sales growth expectations and improving consumer demand. Its ADRs added 1.42 percent to $26.35.
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