Top Stock Pick Cemex Tumbles as Global Growth Concerns Sink Pesoby
Shares post biggest decline on IPC as peso falls to record low
Majority of cement maker's revenue comes from outside Mexico
Cemex SAB, the only Mexican stock that analysts universally recommend buying, fell to the lowest level in more than three years as concern over global growth damped the outlook for construction materials and the peso sank to a record.
Shares fell 7.4 percent to 8.31 pesos at 2:24 p.m. in Mexico City, the lowest since August 2012. Mexico’s benchmark IPC dropped 2.5 percent as the peso touched a record 17.8054 per dollar Thursday, swelling the size of Cemex’s overseas debt obligations in local terms.
Cemex has dropped for four straight days at the start of this year after falling 35 percent last year amid what Chief Executive Officer Fernando Gonzalez said in October was the “unprecedented strength of the U.S. dollar versus most of the currencies in our markets.” All 10 analysts surveyed by Bloomberg recommend buying Cemex shares, making it the only unanimous buy on the IPC.
While stocks are tumbling worldwide, Cemex may be particularly affected by global growth concerns, according to Jorge Lagunas, head of equity strategy, sales and trading at Interacciones Casa de Bolsa SA. Cemex is “the Mexican business that’s most linked to the global economic environment,” he said in an e-mail.
Just 19 percent of Cemex’s revenue comes from Mexico while 98 percent of its bonds are denominated in overseas currencies, according to data compiled by Bloomberg. Jorge Perez, a spokesman for Monterrey, Mexico-based Cemex, declined to comment on the impact of the peso’s decline and global growth concerns on the share price.