Shares of Kansas City Southern took a big drop Tuesday on the heels of its tumble early this month, both times because of issues in Mexico.
By MARK DAVIS
The Kansas City Star
The railroad operators stock fell $4.29, nearly 4.5 percent, to $91.67. Its shares ended January at $105.59, meaning Tuesdays closing price marked a 13 percent decline in 11 trading days.
Analysts said the fresh damage came from a bill in the Mexican legislature that would open Kansas City Southerns government-sanctioned rail operation there to new competition.
All of a sudden, thats in play, said Jon Braatz, an analyst at Kansas City Capital Associates.
Bloomberg News reported that a note from JPMorgan analyst Thomas Wadewitz said the proposed legislation had a meaningful probability of becoming law and would hurt Kansas City Southerns pricing potential.
A statement from Kansas City Southern said the proposed changes face a long road before they would become law. It also said the changes would hurt Mexicos economy without helping its shippers.
The proposed law would not lower prices or broaden the railroads share of business; instead it would reduce investment and confidence in Mexico, create uncertainty in an industry that has helped Mexicos manufacturing economy to flourish, and potentially disrupt the current operation of the Mexican rail network, it said.
Mexican law also would provide remedies to concessionaires against the breach of the rights under their concession titles and the North American Free Trade Agreement, Kansas City Southern said.
Earlier this month, Kansas City Southern shares tumbled 5 percent after expectations of growth in its Mexican rail operations were reduced. Braatz had said the reduction reflected slower than expected production schedules at new auto plants in Mexico.
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