Jan. 8 (Bloomberg) -- Billionaire Carlos Slim’s two construction companies tumbled as Mexico’s stock exchange removed them from the main index and investors shied away from builders on concern the economy will slow further this year.

Carso Infraestructura y Construccion SAB, known as Cicsa, dropped 5.5 percent to 6.15 pesos, the lowest in a month. Impulsora del Desarrollo y el Empleo en America Latina SAB, known as Ideal, tumbled the most in five weeks, losing 6.1 percent to 8.07 pesos.

“Being included in the index is positive for stocks and results in a short-term rally while indexed portfolios and trackers adjust to the new index,” said Banco Santander SA analyst Gonzalo Fernandez. “Likewise, being replaced has a negative effect on excluded stocks.”

The companies will be replaced on the Bolsa Index on Feb. 3 as part of an annual rebalancing.

Cicsa has fallen 23 percent since it went public in October 2005, compared with the Bolsa’s 47 percent gain. Ideal has lost 1 percent during the same period.

Fernandez said the companies’ low free float of shares may have also discouraged investors. Trading volume in Cicsa dropped in December to 8.41 million shares, the lowest ever.

Ideal was spun off from Slim’s bank, Grupo Financiero Inbursa SA in 2005. Cicsa, part of his industrial company Grupo Carso SAB, offered shares to the public in the same year.

Slim’s construction companies saw trading volume tumble as investors sold the shares when Mexico’s economy began to slow last year. The economy may grow less than 1 percent this year, Deputy Finance Minister Alejandro Werner said today. Mexico sells about 80 percent of exports to the U.S., which entered a recession in the fourth quarter of 2007.

Aversion

“Starting in the second half of 2008, there was an aversion to construction companies,” Fernandez said in an interview.

Slim’s companies have lost government contracts to Empresas ICA SAB, Mexico’s biggest construction company. ICA bested Ideal in bidding to build a $768 million hydroelectric project for Mexico’s government-run utility. ICA was the lead company in a $725 million contract for a Mexico City drainage tunnel in November; Cicsa was a part of the group.

The index will add stock exchange operator Bolsa Mexicana de Valores SAB, miner Cia. Minera Autlan SAB, steelmaker Industrias CH SAB and Grupo Aeroportuario Centro Norte SAB. The exchange changes the index members annually to reflect trading activity.

To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net

Last Updated: January 8, 2009 17:06 EST