MEXICO CITY (Reuters) - Members of Mexico’s association of brokerages last week asked officials from the country’s stock exchange to look into a recent surge in the stock price of banking and retail company Elektra (ELEKTRA.MX), according to three members of the group.
Shares of Elektra, which runs appliance stores that have banking and money transfer businesses, are up more than 166 percent so far this year, trading at a five-year high of 701 pesos per share, compared to a 9 percent gain in Mexico's IPC stock index .MXX.
The jump has more than doubled the company’s market capitalization since the end of February to nearly 164 billion pesos ($8.7 billion), according to Reuters data.
Members of the analysis committee of the Mexican Association of Stock Institutions (AMIB) at a meeting on Thursday asked representatives of the Mexican stock exchange to look into the reasons behind the big gains in Elektra’s stock price, according to three people at the meeting, who asked for anonymity due to the sensitivity of the matter.
The committee does not have any formal power to request action from the Mexican exchange or the country’s stocks regulator, the National Commission on Banking and Securities (CNBV). A CNBV spokeswoman declined to comment.
The Mexican stock exchange (BOLSAA.MX) said it does not comment on individual stock moves. Elektra referred to a recent series of statements to the stock exchange in which the company said it was not aware of the cause behind the price gains.
Martin Hernandez, an analyst at Signum, the only brokerage covering the stock, said strong results since the fourth quarter of last year were driving the gains, pointing to a drop in bad loans by 50 percent to 3.4 percent of the company’s portfolio.
On Wednesday he said he raised his price target to 700 pesos from 530 pesos per share.
“If the first quarter report is better than expected, it could go even higher,” he said. Analysts who are not registered to provide analysis on a stock cannot legally comment on its moves.
Elektra is controlled by Mexican billionaire Ricardo Salinas. Investors have been wary of Elektra since Salinas had a run-in with the U.S. Securities and Exchange Commission in 2005.
Salinas withdrew Elektra and two other companies from their New York listings in 2005, after he became a target in an SEC fraud investigation. Salinas paid a $7.5 million fine to settle that probe without admitting or denying any wrongdoing.
($1 = 18.7792 Mexican pesos)
Reporting by Sheky Espejo and Michael O'Boyle; Editing by Cynthia Osterman