Mexico's benchmark stock index surged 1.3% to a record closing high Thursday, spurred by expectations of an economic recovery and signs that long-awaited fiscal reform is moving forward.
The IPC index, made up of the Mexican market's 35 most liquid stocks, rallied 110.57 points to end at 8,342.63, surpassing its previous record close of 8,319.67 on March 9, 2000.
When converted from pesos to dollars, however, the prices of many Mexican stocks remain far below their highs of recent years.
The Mexican economy has been struggling to get back on a sustained growth track this year. The nation's unemployment rate hit a four-year high during the summer.
But the U.S. economy's acceleration has lifted hopes of a spillover effect for Mexico, which sends 90% of its exports to the United States.
"There seems to be a lot of optimism building, both on the possibility of a recovery in Mexico ... and for structural reforms," said Robert Berges, a Latin American-equity strategist at Merrill Lynch & Co.
In a bid to raise revenue as well as consumption of some goods, Mexico's government sent its 2004 budget to the congress Thursday with a plan to cut the nation's value-added tax to 10% from 15%, but also apply it to previously exempt food and medicines.
The IPC index has soared 36% in peso terms this year, compared with a 20% gain for the U.S. Standard & Poor's 500 index in dollar terms.
Measured in dollars, the IPC index is up 29% this year as the peso's value has fallen against the dollar.
Among U.S.-traded Mexican stocks, broadcast giant Grupo Televisa rose 54 cents to $40.64 on the New York Stock Exchange on Thursday. The price is up 46% this year.
Retailer Grupo Elektra eased 28 cents to $20.37 on the NYSE but is up 106% this year. TelMex, the telecom giant, rose 42 cents to $32.91 on the NYSE and is up 2.9% this year.