(Bloomberg) -- Mexican assets won some relief after polls showed Hillary Clinton pulling ahead of Donald Trump among likely voters in Tuesday's U.S. presidential election.
All 35 stocks on the IPC gauge advanced, sending the benchmark index to its biggest gain in almost two years, a day after the FBI said Clinton's handling of e-mails wasn't a crime, lifting a cloud over her candidacy. Growing conviction Clinton will win sent the peso up 1.7 percent to 18.7075 per dollar as of 2:37 p.m. in Mexico City, leaving it poised for the biggest advance in four weeks. Mexican markets also got a boost from data Monday that showed consumer confidence increased last month, surprising analysts who predicted a drop.
"There's less fear," said Jose Cebeira, a senior analyst at Mexico City-based fund manager Corp. Actinver SAB, who has buy recommendations on food companies including Industrias Bachoco SAB, Grupo Bimbo SAB and Gruma SAB. "Now that it looks like Clinton has a better chance of winning, money is flowing back into Mexico. It's good for companies that export to the U.S."
Mexican assets have acted as a gauge for investors' expectations for the election, with the currency and stocks often rallying when Clinton advances and falling when Trump is perceived to be gaining ground. The Republican candidate has criticized the North American Free Trade Agreement that made Mexico into an export powerhouse and called for building a wall along the countries' border, creating concern among some traders that a Trump presidency would be bad for Mexico's economy.
The benchmark stock index is trading at 18.6 times estimated earnings. While that's higher than the average for Latin American stocks, it's down from as high as 20 times in May 2015.
The peso, on the other hand, is the cheapest in 20 years compared to its peers after suffering the brunt of investors' election anxiety because it is easily to trade and cheap to borrow. The real effective exchange rate fell to the lowest since 1995 in September, according to data from the Bank for International Settlements.
The currency has gained 3.7 percent in the last three sessions and returned to a level not seen since before the FBI announced Oct. 28 that it was reviewing more Clinton e-mails. A Trump victory may push the currency to a record low past 20 per dollar, with some analysts forecasting a drop to as low as 25 per dollar.
Clinton led Trump by three percentage points among likely voters nationally, according to the final Bloomberg Politics national poll before Tuesday's election. FBI director James Comey said Sunday in a letter to Congress that his agency maintained its July conclusion that it wouldn't recommend criminal charges against Clinton.
The gains Monday come after the IPC lost 2.7 percent last week, the biggest weekly decline in two months, on concern the FBI's investigation into Clinton's use of private e-mail while secretary of state could derail her candidacy.
The IPC climbed 3 percent to 48,091.15, the largest advance since December 2014. Mexican airports gained on reports that showed traffic remained strong in October. Grupo Aeroportuario del Sureste SAB rose 5.6 percent to a record, while Grupo Aeroportuario del Pacifico SAB shares jumped as much as 5.3 percent, the most on an intraday basis in a year.
To contact the reporter on this story:
Michelle F. Davis in Mexico City at mdavis194@bloomberg.net
To contact the editors responsible for this story:
Brendan Walsh at bwalsh8@bloomberg.net
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