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Grupo Elektra SA recorded the biggest two-day drop since at least 1994 as Banco Santander SA (SAN) said Mexican stock exchange rule changes may cut the company’s weight in the benchmark index in half.
The retail and banking company controlled by billionaire Ricardo Salinas fell 16 percent to 865.93 pesos at the close in Mexico City, following an 18 percent decline yesterday. The shares closed at the lowest price since Aug. 15.
Investors are selling Elektra after the Mexican stock exchange said April 11 that its index would use a new method for calculating shares that are freely available for trading. While Elektra has a free float of 29 percent based on today’s rules, a derivative instrument the company holds keeps most of those shares from being openly traded.
Under the new rules, Elektra’s free float could fall below the 12 percent threshold required by the IPC index, Gonzalo Fernandez, a Santander analyst, wrote in a research note dated today.
“Nevertheless, it is worth clarifying that depending on the maturity of the derivatives, probably not all shares held in the trust would necessarily be eliminated in the free float calculation,” Fernandez wrote.
Elektra’s weight in the IPC would fall to 2.15 percent from 4.2 percent if half of the shares involved in the derivative are deducted from the free float, according to Ferndandez.
Dan McCosh, an Elektra spokesman, declined to comment.
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