June 29 (Bloomberg) -- Mexico’s benchmark stock index surged to a record on the last trading day before presidential elections that may return the once-dominant Institutional Revolutionary Party to power after a 12-year hiatus.
The IPC climbed 1.4 percent to 40,199.55 in Mexico City trading, the highest level on record on a closing basis. The gauge has rallied 2.9 percent in five consecutive daily gains this week, compared with a 2 percent advance for the Standard & Poor’s 500 Index and a 2.7 percent increase for MSCI Inc.’s Latin America index. Mexico’s peso jumped 2.1 percent to 13.3537 per U.S. dollar today at 3:25 p.m. Mexico City time.
Enrique Pena Nieto, of the Institutional Revolutionary Party, or PRI, is favored to win the presidency in July 1 balloting by at least 10 percentage points, and his party may garner enough seats to give him a majority in both houses of congress, polls show. Pena Nieto says he supports legislation to make it easier to hire and fire workers and would create incentives to bring more workers into the formal economy.
The market is anxious “to see how the congress is made up and if they can make progress on the structural reforms,” said Carlos Gonzalez, an equity analyst with Monex Casa de Bolsa SA in Mexico City. “The economic variables are stable. We don’t expect anything that could generate volatility.”
Pena Nieto, 45, also has pledged to expand private investment in the oil industry, loosening state-controlled Petroleos Mexicanos’s grip.
Mexico’s stocks joined a global rally today after euro-area leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy.
While the latest poll from Consulta Mitofsky shows Pena Nieto’s PRI-Green Party coalition may garner a majority in both houses of Congress, the survey shows him short of a two-thirds majority, signaling he would have to build coalitions to win approval for the constitutional changes needed for the pledged energy industry changes. The poll’s margin of error is 3.1 percentage points. Mitofsky interviewed 1,000 registered voters from June 22 to June 24.
The IPC’s gains have also been buoyed by the planned purchase of one of the index’s biggest companies. Anheuser-Busch InBev NV, the world’s biggest brewer, agreed to buy the remainder of Mexico’s Grupo Modelo SAB for $20.1 billion in cash, gaining full control of the Corona maker to increase its presence in emerging markets.
Modelo soared 20 percent this week on reports leading up to today’s announcement. Modelo has a 3.3 percent weighting on the IPC.
To contact the reporter on this story: Jonathan J. Levin in Mexico City at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com