Mexico’s IPC index plunged the most among the world’s major stock benchmarks, touching an eight-month low, as concern mounted that growth is slowing in Latin America’s second-biggest economy.
The IPC fell 1.3 percent to 40,548.44 at the close of Mexico City trading, the lowest level since September. Empresas ICA SAB slid 7.9 percent, extending its two-day decline to 15 percent, the worst such slump since August 2011. Fomento Economico Mexicano SAB, owner of Latin America’s largest convenience-store chain, dropped 3.4 percent after Credit Suisse Group AG cut its recommendation to the equivalent of sell from hold.
Mexican stocks have underperformed U.S. shares and Latin American peers since a May 17 report showed gross domestic product rose 0.8 percent in the first quarter from a year earlier, the slowest since the fourth quarter of 2009. About 75 percent of Mexican companies on the IPC index missed earnings estimates in the first quarter, according to data compiled by Bloomberg.
“We’ve seen data suggesting an economic slowdown in Mexico, which has been affecting the attitudes of investors,” Arturo Espinosa, an equity strategist with Banco Santander SA’s Mexico unit, said in a phone interview today from Mexico City. “We had seen weakness in other emerging-markets like Brazil and China, but Mexico had been able to avoid that.”
Luis Tellez, chief executive officer of Mexican stock exchange operator Bolsa Mexicana de Valores SAB, said stocks have “overreacted” to the GDP data. Mexican companies will report better earnings during the rest of the year, he said in an interview broadcast today on Radio Formula.