Remaining Bullish Mexican Infrastructure


We maintain our bullish view on Mexican infrastructure company Empresas ICA in our Macro-Industry Strategy table, as strong fundamentals and the stock's recent bounce off of trendline support indicate that further gains are likely in the coming weeks. Given the company's large market share in construction-related services, we believe that ICA is well placed to benefit from a recovery in fixed investment growth in H213, as well as President Enrique Peña Nieto's US$315bn National Infrastructure Plan, which will span 2013-2018. Indeed, Peña Nieto recently spoke directly to the need to speed up public spending for infrastructure this year, stating his intention to allocate an additional US$2bn to focus on areas including roads and the housing sector, as the latter has been hit hard by a change in government policy in recent quarters. Moreover, we anticipate that ICA will continue to benefit from the government's ongoing reform drive, expecting it to be an important player in energy-related infrastructure projects going forward. From a technical perspective, the stock's bounce off of an area of key support in recent trading, sustaining its uptrend, reaffirms the technical justification for our bullish view.

Uptrend Remains Unbroken
Mexico - Empresas ICA Share Price, MXN

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Geography: Latin America, Latin America