Elektra shares fall further; market cap loss $6 billion

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MEXICO CITY (Global Markets) - Shares of retailer and bank company Elektra fell sharply for the second straight day Friday, bringing the drop in its market value to more than $6 billion, following a decision that will reduce Elektra's weighting in Mexico's benchmark stock index.

On Wednesday the local stock exchange said it would change the way it picks shares in its IPC index, cutting Elektra's weighting, starting in September.

The change sparked selling of Elektra shares by investors who seek to match the index returns.

The company, owned by one of Mexico's richest men, Ricardo Salinas, has seen its market value drop by more than 80 billion pesos ($6.08 billion) in the past two days, to 222.5 billion pesos.

Elektra shares (ELEKTRA.MX) sank more than 11 percent to 920 pesos in morning trading Friday, extending a slide that started with a 17 percent slump on Thursday.

The losses have helped drag down the IPC index, which was off 0.7 percent on Friday, also hurt by concerns over Chinese growth data and the euro zone debt crisis.

Elektra is largely owned by Salinas and his family. Salinas enjoyed the largest increase in wealth in this year's list of world millionaires by Forbes magazine, driven by Elektra's jump in value.

The large proportion of stock tied up by the family and an equity swap used by Elektra mean there has been a squeeze on the scarce freely floated shares since Elektra's weighting increased in the IPC index last year.

Elektra shares rose nearly threefold in 2011 to make it Mexico's third-biggest company by market capitalization. On Friday, Elektra had fallen to No. 6.

The company currently has a weighting of just over 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.

A spokesman for Elektra said the company does not comment on share price movements. ($1 = 13.1528 Mexican pesos)

(Reporting by Elinor Comlay; editing by M.D. Golan and John Wallace)