Mexico Stocks Decline, Led by America Movil, Airport Operators

By William Freebairn

July 9 (Bloomberg) -- Mexican stocks fell for the first time in three days, led by America Movil SAB, after inflation quickened and a tumble for financial companies sent the Standard & Poor's 500 Index into its first bear market in six years.

America Movil, Latin America's biggest mobile phone provider and the most traded stock on the exchange, dropped the most in two months. Airport operators including Grupo Aeroportuario del Pacifico SAB slid the most on the Bolsa index after reporting less passenger traffic than analysts expected. Consorico Ara SAB led homebuilders higher before second-quarter earnings reports.

``The connection today was with the U.S. market. Oil took a break today, but the financial turmoil continued, hurting growth prospects,'' said Rogelio Gallegos, who helps manage the equivalent of about $325 million at brokerage Actinver SA in Mexico City.

The Bolsa index declined 1.6 percent to 28,095.79, the lowest since Feb. 7. Chile's Ipsa added 0.1 percent and Peru's Lima General rose 1.1 percent. Markets in Brazil and Argentina were closed for holidays.

U.S. stocks slid today, sending the S&P 500 into its first bear market since 2002. Fannie Mae and rival Freddie Mac led financial shares to their biggest fall in six years after Fannie sold $3 billion in notes at record yields over benchmark rates.

In Mexico, annual inflation quickened to 5.26 percent in June from 4.95 percent in May, adding to speculation the central bank will raise borrowing costs for a second time this year. The central bank, which seeks to keep inflation, at 4 percent or lower, unexpectedly raised the benchmark rate to 7.75 percent last month, ignoring suggestions by President Felipe Calderon that borrowing costs were too high.

America Movil Falls

America Movil fell 3.7 percent to 25.74 pesos.

``Investors are rightly concerned with the impact of lower rates in Latin America and further competition,'' Pali Capital Inc.'s Walter Piecyk said. ``There's also inflation concerns. Inflation will make it harder for the company to achieve its overly optimistic estimates'' for revenue per user.

Grupo Aeroportuario del Pacifico SAB, the country's largest airport operator, dropped the most since trading began in 2006 after it said it handled 4.8 percent fewer passengers in June than a year earlier.

Citigroup Inc. advised selling the shares, saying the company will be hurt by reductions in flights by low-fare carriers as oil prices rise. Interacciones Casa de Bolsa had expected traffic to rise 0.6 percent, according to a July 4 report.

`Difficult Times'

``There are difficult times ahead and an adjustment is under way,'' analyst Karla Pena of Interacciones said in a phone interview from Mexico City. Airlines revenue will decline as low- fare airlines reduce flights in the face of surging oil prices, she said.

``Their business is slowing and it has stopped being a favorite of investors,'' Pena said. She said she may review her ``buy'' rating on Gap, as the airport company is known, after second-quarter results are announced this month.

Gap fell 12 percent to 27.31 pesos.

Grupo Aeroportuario del Centro Norte SAB, the operator of 13 Mexican airports, slipped 4.1 percent to 21.62 pesos after reporting passenger traffic rose less than Interacciones expected.

Homebuilders Climb

Consorico Ara SAB, the fourth biggest homebuilder, climbed the most in two weeks. Corporacion Geo SAB, the second-largest builder, advanced the most in six weeks.

``The concerns about rising raw materials costs have been exaggerated,'' Carlos Hermosillo, analyst at Vector Casa de Bolsa, said from Mexico City. Second-quarter results for the homebuilders will climb, he said.

Geo may ``surprise positively'' when it reports results July 24, JPMorgan Chase & Co. said. Revenue growth will be in line with estimates for all builders, analyst Adrian Huerta wrote.

Geo climbed 2.4 percent to 33.31 pesos. Ara gained2.3 percent to 9.63 pesos.

In Chile, gains were led by Sociedad Quimica y Minera de Chile SA, the biggest fertilizer producer.

``After the sharp decline of the Ipsa index last week, investors are taking the opportunity to buy stocks that are now looking very attractive in terms of price earnings,'' said Alvaro Pipino, head of research at Santiago-based brokerage IM Trust. The Ipsa fell 7.7 percent last week.

SQM jumped 3.5 percent to 21,100 pesos, the most in two weeks. Global fertilizer demand may rise 14 percent by 2012 as farmers increase plantings to benefit from high prices and growing food consumption, the International Fertilizer Industry Association said.

To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net