Mexico shares suffer worst daily drop in nearly 3 years, battered by airport operators

By Noe Torres

MEXICO CITY (Reuters) -Mexico’s main stock index posted its worst daily performance since January 2021 on Thursday, dragged down by a sharp sell-off in the country’s main airport operators following changes to tariff base regulations that analysts fear could harm the sector.

Mexico’s S&P/BMV IPC stock index ended more than 2.5% weaker, marking the biggest daily drop in nearly three years and its lowest close in nine months.

Airport operators had their worst trading day ever, with OMA ending down more than 25%, while peers GAP and Asur tumbled as much as 22% and 16% respectively.

The companies on Wednesday flagged fee changes by the country’s civil aviation regulator, without giving further details. They said they were evaluating the impact of the changes, which took effect immediately.

The ministry of transport declined to comment.

Analysts say one likely move could be cuts to airport use fees (TUA) that passengers pay in Mexico.

Mexican brokerage Vector said in a note the changes looked to be negative for the sector.

“The possible reduction in airport use fees (TUA), as well as non-aeronautical income, could have a negative impact on the profitability and generation of free cash flow at the airport groups,” Vector analyst Marco Antonio Montanez wrote.

“We recommend short-term caution in the face of abrupt movements that could be seen in companies’ prices.”

Mexico’s government has had a rocky relationship with the sector dating back to its earliest days.

President Andres Manuel Lopez Obrador sparked a major sell-off in Mexican assets in 2018 when he canceled a partly built new airport for Mexico City, arguing the project was too expensive and tainted by corruption.

(Reporting by Noe Torres; Writing by Dave Graham and Isabel Woodford; Editing by Sarah Morland, Stephen Eisenhammer and Richard Chang)