Monday, April 27, 2009

Mexican Commentary April 27, 2009

Mexican Commentary April 27, 2009

Mexican ADRs declined from fear that the Swine Flu will impact the economy on April 27, 2009. With IBA’s swine production particularly a worry, it was sold today. In addition we eliminated GOL, KOF, GMK and SDA. These stocks are particularly exposed to the food sector. Tourist related business was also more affected by the decline as represented by GOL a Brazilian airline.

The clearstation.com portfolio stands at $340,230.53 for 33 individual items that originally had $10,000 representation for each and is ranked # 19 on Clearstation.com, up 3 slots from the previous day (Friday).

All Mexican stocks in the portfolio declined. Mexican home builder HXM led the decline at 19.46 down 2.39, 10.93% followed by construction company ICA at 7.26 down 0.77, 9.58%.

According to the Bank of Mexico, the peso closed at 13.775 to the US Dollar, 4.1% lower than on Friday.

On the Bolsa in Mexico City, the IPC index at 21,827.109 down 3.34%.

The reaction to the fear of a pandemic of Swine Flu had a very negative effect on the peso and financial markets today. Deaths from the disease continue to be reported but trends are uncertain. If increasing trends for deaths follow this first news, a sharper than expected contraction to the Mexican Economy would follow. This should continue to impact the peso, stock prices, inflation and may cause a wave of illegal immigration into the United States. This would be a temporary phenomena but its duration is uncertain.

Analysis of previous news impacts concerning heath like SARS for example, show a pattern of a trough forming flowed by economic recovery. This would make for an exceptional opportunity for the purchase of Mexican securities. I will continue to be alert and will note changes here.

3 comments:

  1. Buying GMK today. LT breakout out of a shallow dish formation. Constructive comments from ADM. Losses to end by EOY.

    ReplyDelete
  2. Comments on the Motly Fool are driving up the price. Be careful. Where their hype dies down there might be a temporary pull-back. That will be the time to buy.

    ReplyDelete
  3. According to their Q1 posted on the Mexican Bolsa website, they took substantial loses from their derivative currency hedging operations. These loses are the main concern that brought down the stock. Successful refinancing is the key and once accomplished this stock can resume its previous levels well above $30 a share but the timing is also uncertain. The market these past few days has shown a significant rise - this may be due to some hype from the Motly Fool website. Short-term speculation is not advised. I am following a long-term accumulation strategy with a planned large buy into this thin market once the hype wears off. this may take a couple of weeks. If I am wrong, I'll be very happy if it should double instead before I make a bigger purchase.

    ReplyDelete