By Anthony Harrup
MEXICO CITY--Mexican stocks rose Monday, snapping a 10-session losing streak in a rebound after a dismal start to the year.
The IPC index of leading issues closed up 1.1% at 40,707 points on volume of 227.5 million shares worth 7.11 billion pesos ($397.7 million).
This week could well see a technical rebound in markets after last week's rout, "but that doesn't mean it's the end of the decline, because volatility is likely to continue as oil prices continue falling and China continues to show weak economic data," the MetAnalisis research firm said in a note.
Banco Santander said the recent string of losses in the IPC, which fell 6.3% in the first week of 2016, has created a number of buying opportunities with the index at it lowest level in nearly two years.
"In our view this level represents an attractive entry point for investors with medium to long-term investment horizons," Santander said.
At the same time, Santander lowered its outlook for the Mexican peso, moving its year-end 2016 forecast to 16.80 pesos to the U.S. dollar from 15.90 pesos, citing the deeper-than-expected depreciation of the local currency and the possibility that oil prices could take longer to recover than previously anticipated.
The peso firmed against the dollar on Monday, and was quoted in Mexico City at 17.8875, according to Infosel, compared with 17.9435 pesos late Friday. The currency briefly touched 18 pesos to the dollar in early trade as oil prices fell further.
Among individual stocks, telecommunications company America Movil shares rose 2.2% to 11.16 pesos, and cement maker Cemex shares rose 0.8% to 7.83 pesos.
Retailer Wal-Mart de Mexico shares rose sharply for a second consecutive session after the company reported strong December sales last week. Walmex shares ended 4.1% higher at 42.73 pesos.
Barclays said in its first-quarter equities outlook that it favors Mexican consumer discretionary stocks, infrastructure concessions and banks as it takes a "cautiously optimistic" view of the local market. "We assume little MXN depreciation from current levels and believe the return in USD-terms looks rather attractive in an emerging market equities environment," Barclays said.
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