Cemex Shares Tumble Most on Index Amid Global Growth Concerns

  • Stock declines as weak peso exchange rate hurts debt
  • International building material industry hit by slowdown

Cemex SAB, the biggest cement maker in the Americas, declined for a fifth day as concern over a slowdown in China and other developing economies roiled building-material stocks.

Cemex shares fell 3 percent to 11.74 pesos at 10:31 am in Mexico City, the most on the benchmark IPC Index, which lost 1 percent. The Mexican peso touched a record low Thursday and has fallen 20 percent against the U.S. dollar in the past 12 months.

The currency slump combined with slowing global growth are delivering a blow to Cemex, according to Invex Casa de Bolsa. While 80 percent of Cemex’s cash flow comes from Latin America, 80 percent of its debt is U.S. dollar denominated, causing a foreign currency “mismatch” that is capping the company’s stock performance, Morgan Stanley says.

“There are more and more concerns about global economic growth,” Hugo Mendoza, an analyst at Invex, said in a phone interview from Mexico City. “While the company has announced price increases in local currency, that won’t compensate for such a strong depreciation in emerging-market exchange rates.”

Morgan Stanley analysts Nikolaj Lippman and Lilian Starke cut their price target to $11 from $13 in a report released September 17th, stating that stocks will be hurt as long as macro volatility persists or until management lowers risk and debt. They retain an overweight recommendation on the stock.

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