Mexican stocks hit record high on calls from Citi and BofA

(Bloomberg) – Mexican stocks hit a record high on Wednesday, fueled by reports from Citigroup Inc. and Bank of America Corp. which underlined the country’s relative stability in the face of volatility in other emerging markets.

The benchmark S&P/BMV IPC stock index rose 1.7% to close at a record high of 53,951 points. Citigroup analysts led by Andres Cardona raised their targets for the benchmark in a note released on Tuesday, where they said it would hit 57,000 points by mid-year and 60,000 by the end of 2022. That would mark a gain of around 11% yr-end of Wednesday’s close.

“Mexico stands out as one of the top three emerging markets along with Russia and Taiwan,” Cardona said in the note. “While stock selection is still relevant, we see Mexico as an index supported by upward earnings-per-share revisions.”

Earlier this week, Bank of America recommended an overweight in Mexican equities due to the country’s close connection to the US economy, a relatively healthy fiscal outlook and an election calendar with no major national vote, unlike some others. large Latin American countries like Brazil and Colombia, where presidential races can add volatility.

“Mexico largely outperformed Latin America in 2021 and continues to outperform,” analyst Carlos Peyrelongue said in a Jan. 10 note.

The CPI index posted its best year since 2009 last year, gaining nearly 21% despite a drought of new public offerings and concerns over President Andres Manuel Lopez Obrador’s nationalist energy policies and populist attacks on some members of the business elite. Lopez Obrador’s commitment to fiscal austerity has helped support the peso and made the country a top pick for bond investors.

Sector-wise, Bank of America favors banks, cement and consumer stocks. Citi’s top picks include bank Grupo Financiero Banorte SAB, bottler and convenience store operator Fomento Economico Mexicano SAB, and restaurant operator Alsea SAB.

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