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Mexican Bolsa Index Could Lose Another 20 Percent - Buying Opportunity Coming

BOSTON, May 4 /PRNewswire/ -- The Swine Flu is costing Mexico $100 million a day. When the SARS virus hit in 2002, Hong Kong's Seng Index suffered an 18.7% loss in the months that followed.

"The H1N1 flu is already affecting Mexico's enormous tourism industry as well as the daily lives of its citizens, if the situation worsens, there could be serious effects on the market," says emerging markets expert, Robert P. Smith, founder of Turan Corporation, a Boston based firm that specializes in trading emerging markets' sovereign debt and evaluating creditor claims against foreign governments.

Smith, the author of the new release, "RICHES AMONG THE RUINS: Adventures in the Dark Corners of the Global Economy" (AMACOM, 2009) warns the Bolsa will go lower.

"The Mexican Bolsa Index, lost 3.3 percent when news of the H1N1 flu first appeared on April 24th, 2009. It has since staged several attempts to rally, but if this flu affects Mexico in any way that approaches the impact of SARS on Hong Kong, the Bolsa index could easily fall 20% from its current levels due to confidence, investments, and Mexico's reliance on tourism."

The Mexican Peso has lost 4.6% to the U.S. dollar since the outbreak. "Not only does the Peso have a negative outlook, but the economy will be even harder hit than the 4.8% decline that the Central Bank projects," says Smith.

To gain perspective, Smith examines the SARS episode in China. According to BBS News Online, SARS first appeared on November 16, 2002 at a village in Guangdon Province. Hong Kong's Hang Seng Index (HSI), peaked shortly thereafter on December 3rd, 2002. Severe restrictions to travel in the region to control the transmission of SARS which is transmitted, like H1N1 flu, through human contact, caused large loss of value among travel and property related stocks on the HSI, which declined 18.7% during the SARS crisis. The trough to this decline came on April 25th 2003, shortly after Canadian scientists confirmed having sequenced the SARS genome and the World Health Organization declared the epidemic to have peaked (BBC, South China Morning Post).

If you're looking to profit in this wild market, Smith says "wait." "There could definitely be a buying opportunity in both Mexican bonds and equities, but it's too soon to tell how long this could go on."

SOURCE Robert P. Smith

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