Mexico’s peso has taken a hit this year as turmoil fueled by the U.K.’s secession from the European Union and U.S. political uncertainty prompt a flight from risk. One businessman south of the border can thank the upheaval for his recent good fortune: Alberto Bailleres.
The 84-year-old Mexican mogul, who controls silver and gold miners Industrias Penoles SAB and Fresnillo Plc, saw his net worth swell by $2.2 billion in June to $13.1 billion, more than any other magnate in the world, according to the Bloomberg’s Billionaires Index. Penoles is Mexico’s top-performing stock this year and Fresnillo is London’s big winner as investors flock to precious metals.
Mexico’s peso short sales have climbed as the currency has been singled out as a hedge for global risk amid growing concern the so-called Brexit will roil markets outside Europe and that the U.S. economy will keep just puttering along. As stocks, bonds and currencies slide worldwide, safe havens like gold and silver benefit. Silver is up 45 percent this year and that’s good news for Penoles, the world’s biggest producer of the metal.
“Brexit and the U.S. elections have caused volatility — and are some of the factors that entice investors to be over-loaded in more secure assets,” said Bernardo Trejo, an equity analyst at Invex Casa de Bolsa SA in Mexico City. “A precious metal maintains value in a time of uncertainty.”
After Fresnillo surged 184 percent and Penoles posted a 168 percent rally this year through Wednesday, a growing chorus of analysts and investors say the stocks may be overbought. The company’s 14-day relative strength index surged to 95.3 on Monday, the highest level since January 2004. Some technical analysts see an RSI of 70 or greater as a signal that a security could be poised for a decline.
On Thursday, Penoles fell 1.5 percent at 9:42 a.m. New York time as silver futures slid.
BlackRock Inc. has sold off a net 3.4 million shares of Penoles and Fresnillo shares in the last six months, according to fund filings, joining other investors that have sought to take profits after the price run-up. For now, Bailleres doesn’t appear to be among them.
“I don’t see any threats in the mid-term,” said Jean-Baptiste Bruny, BBVA Research equity analyst in Mexico City. “With all the risks that we are seeing with the Brexit, people are looking for this type of safe investment.”