OHL Mexico SAB (OHLMEX*) surged the most on record, extending a two-week rally, as speculation the construction company will benefit from spending under Mexico’s next president lured investors to the stock’s cheap valuation.
OHL Mexico, the Mexican unit of Spanish construction company Obrascon Huarte Lain SA, rose 7.7 percent to 17.27 pesos at the close of trading. That extended its rally to 22 percent from a record low 14.11 pesos, which was 0.7 times book value, on June 18. The benchmark IPC index of 35 Mexican companies climbed 0.8 percent today.
Investors have been buying the stock as polls leading up to the July 1 election showed Enrique Pena Nieto poised to win Mexico’s presidency on pledges to push for more infrastructure in Latin America’s second-biggest economy. Pena Nieto takes office Dec. 1. Before the rally, the stock had been plummeting after the state of Puebla voided a concession with its Autovias Concesionadas unit in May.
Pena Nieto’s presidency has “a potential benefit for the construction and infrastructure sector,” Carlos Ponce, an analyst with Grupo Financiero Ve Por Mas SA, said in a research note dated yesterday. About 45 percent of Pena Nieto’s campaign pledges were construction initiatives, according to data compiled by Ve Por Mas.
Investors also exaggerated the impact of losing the Puebla project, said Gonzalo Fernandez, an analyst at Banco Santander SA.
“The market over-penalized the news of the concession with Puebla being cancelled,” Fernandez said in a telephone interview from Mexico City.
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