Cemex may benefit from money transfers
A revival in money transfers to Mexico may increase demand for everything from cement to mobile- phone service, improving the profit outlook for Cemex and America Movil SAB, according to brokerage Vector Casa de Bolsa.
Remittances are poised to climb as much as 5 percent in 2010 as the U.S. economy recovers, according to a report this month by Mexico City-based BBVA Bancomer SA, the nation’s largest lender. The payments likely will drop as much as 13 percent this year.
Vector Casa de Bolsa analyst Martin Lara, who follows America Movil, Latin America’s biggest wireless carrier, says money from abroad may push low-income customers to spend more on prepaid minutes. A rebound in transfers typically leads to more home-improvement projects, which may help boost demand at cement maker Cemex by 4 percent in 2010, said Carlos Hermosillo, another analyst at Vector, based outside of Monterrey, Mexico.
“You definitely could see a recovery next year, depending on how remittances go,” said Hermosillo, referring to the build-it-yourself market. “It’s very important. There’s a high correlation.” Cemex is the world’s third-largest cement maker.
The central bank reports remittance data for October tomorrow. In September, money transfers fell 18 percent from a year earlier. Transfers slid 20 percent in May, the most on record, to $1.9 billion as the recession spurred job losses and lower incomes for Mexicans living north of the border.
The October figure will help analysts determine whether money transfers, which generally recover more slowly than gross domestic product, have bottomed out, said Greg Watson, a remittances specialist at the Inter-American Development Bank in Washington.
Published under Cement News
