By Carla Mozee
Stocks in Mexico rose Tuesday, winning back ground lost in the
previous session's sell-off as they tracked a rebound on Wall
Street.
Mexico's IPC rose 0.4% to 21,677.58. The benchmark dropped 2.9%
on Monday.
Mexican stocks found firmer footing as positive comments from
U.S. banking executives helped spur purchases of financial stocks,
lifting U.S. indexes. The S&P 500 Index (SPX) was up 1.6% and
the Dow Jones Industrial Average (DJI) rose 1.2%.
The gains on Wall Street also arrived despite a spate of dreary
quarterly reports including one from heavy-equipment provider
Caterpillar Inc. (CAT), which expects a global economic contraction
of 1.3% this year.
Among Tuesday's advancers in Mexico City were shares of Fomento
Economico Mexicano (FMX), or Femsa, up 3.2% after UBS Pactual
initiated coverage of the brewer and soft-drinks maker with a buy
rating.
"We believe Femsa's current valuation is attractive --
considering strong cash generation at Coca-Cola Femsa, improving
beer operations," and room for continued earnings growth at its
convenience-store chain OXXO, said analysts Tomás Lajous and
Albelardo Hernández in a note to clients Tuesday.
UBS also said it prefers Femsa to Grupo Modelo, as it believes
Femsa's retail arm "is under-valued, and much too big to ignore."
The broker has a buy rating on brewer Grupo Modelo's shares.
Modelo shares fell 3.6% ahead of the release of its
first-quarter results. The shares were also under pressure after
Modelo said Monday that it won't issue a dividend payment for
2009.
"Whether the decision was driven by the lawsuit with [business
partner Anheuser-Busch InBev] or by the need to save cash in a
difficult year, either one sends a negative signal that could weigh
on the stock in the near term," said analysts at Deutsche Bank.
Meanwhile, banking stocks were mixed after the Senate cleared a
bill that would increase the central bank's authority to regulate
fees and interest rates charged by banks to consumers.
Grupo Financiero Banorte shares fell 4.1% and Banco Compartamos
fell 2.6%, while Inbursa rose 1.2%.
Shares of steel producer Grupo Simec topped percentage gainers
with a rise of 3.9% and shares of Grupo Mexico rose 3.6%. Dow Jones
Newswires reported late Monday that Swiss miner Glencore
International is interested in buying Grupo Mexico's Asarco unit,
which is working its way through bankruptcy court in Texas.
The peso was up 0.2%, gaining ground against the U.S. dollar in
the wake of the central bank's auction of up to $4 billion in
dollar credits by way of a $30 billion swap line the bank has with
the U.S. Federal Reserve.
Chile's IPSA was up 0.6% and Argentina's Merval gained 2%.
Trading in Brazil was closed Tuesday for a holiday.