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Bolsa Mexicana Declines After Itau Cuts on ‘Stretched Valuation’

Bolsa Mexicana de Valores SAB, the operator of Mexico’s exchange, tumbled for a second day after Itau BBA Securities cut its rating and said the stock already reflects expected growth from new share offerings.

Bolsa Mexicana fell 1.6 percent to 32.94 pesos at 2:33 p.m. in Mexico City. The benchmark IPC index of 35 Mexican stocks rose 0.2 percent.

Net income at the Mexico City-based company may climb 20 percent this year as new equity offerings boost trading volume, according to a report dated yesterday from Itau, a unit of Sao Paulo-based Itau Unibanco Holding SA. (ITUB4) At that level of growth, the shares should have a “fair value” of 33 pesos, according to the report, about where they’re currently trading.

“We find it difficult to make a bullish case for BMV at the current stretched valuation based solely on a strong equity- offering pipeline,” analysts led by Alexandre Spada wrote in the report. They cut the stock to the equivalent of sell from hold.

Itau said its model didn’t account for the possible move of Mexican over-the-counter derivatives trading to an exchange environment.

To contact the reporter on this story: Danielle Verbrigghe in New York at

To contact the editor responsible for this story: David Papadopoulos at

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