Mexican cement maker could be border wall winner

MEXICO CITY/MUNICH • President Donald Trump’s plans to build a Mexican border wall are boosting the prospects of builders and material suppliers from Alabama to Frankfurt, but there

may be no bigger winner than a giant cement maker based in Mexico.

Cemex SAB would be one of the companies bestpositioned to profit from a wall that could cost US$15 billion or more as it has operations along both sides of the border. Cemex’s share price jumped as much as 2.6 per cent Wednesday and is the best performing among its peers this year, with its stock up 18 per cent as of Tuesday, according to Bloomberg Intelligence analyst Sonia Baldeira. The outlook for its U.S. business has also been aided by Trump’s plan to spend as much as US$500 billion on roads, bridges, tunnels and airports.

“We are fairly optimistic on the company’s U.S. operations,” Barclays analyst Benjamin Theurer wrote, naming Cemex the top regional pick. “We expect a Trump-boosted pick-up in volume.”

The possibility of profit for a south-of-the-border industrial giant, the largest cement maker in the Americas, shows the tight interweaving of the U.S. and Mexican economies. The U.S. is Cemex’s biggest market, representing a fifth of its revenue, and a windfall from the wall would help complete its comeback from near-bankruptcy after the recession.

The Mexican peso’s 12.6-per-cent depreciation over the past 12 months would have meant bad news for Cemex, as most of its debt is dollar-denominated. The story seems to have changed as Trump moves to fulfil promises made during his campaign.

The Republican painted a picture of a nation beset by undocumented immigrants, and said only a physical barrier — paid for by Mexico — could end the onslaught. The plan didn’t recognize that illegal entries have fallen and that many undocumented immigrants arrive legally, but overstay their visas.

Shares in materials suppliers reflected optimism that a Trump construction boom is ahead. Shares of equipment makers have risen as well. Caterpillar Inc. has climbed 16 per cent since the election and gained 2.3 per cent Wednesday. Titan International Inc., whose tires keep heavy equipment rolling, rose 8.1 per cent.

Another winner could be Nebraska’s Werner Enterprises Inc., whose shares are up 4.4 per cent since Monday. The firm began operations in the border town of Ciudad Juarez, Mexico, in August.

It is a manufacturer and distributor of ladders.