MEXICO CITY Shares in Mexican retailer and banking chain Elektra have fallen by more than a third over three straight days of losses, after the country's stock exchange announced changes to the way it calculates its benchmark index.
The stock exchange revamp, effective in September, will lower the weighting of Elektra (ELEKTRA.MX) in the IPC index .MXX. The announcement prompted investors such as Mexican pension funds that track the index to start selling the shares ahead of the change.
Elektra shares, which almost tripled in 2011, fell 6.4 percent on Monday to 829.03 pesos, following a decline of 16.4 percent on Friday and 17.7 percent on Thursday.
The drop is due to the index methodology changes and it is not an otherwise unusual move, stock exchange chairman Luis Tellez told a local radio program.
The company, owned by one of Mexico's richest men, Ricardo Salinas, has lost about 103 billion pesos ($7.80 billion) from its market value since Wednesday and it is now valued at about $15 billion.
Salinas enjoyed the largest increase in wealth in the latest list of world billionaires by Forbes magazine in March, largely driven by Elektra's jump in value last year.
A large chunk of Elektra's shares are held by Salinas and his family. Further shares are tied up by a bank, which uses them to hedge an equity derivative instrument Elektra holds in order to monetize its share-price gains.
A Citigroup report in January estimated that Elektra's real free float, taking into account the derivative instrument, is about 6 percent. That is much lower than the about 30 percent that Elektra reports to Mexico's stock exchange.
The company currently has a weighting of just under 3 percent in the 35-company IPC index. But it has the second-fewest shares outstanding of any index constituent - just 241.86 million shares. ($1 = 13.2074 Mexican pesos)
(Reporting by Elinor Comlay; editing by Carol Bishopric)