Mexico Peso, Stocks, Bonds Gain on Pension Fund Investment Plan

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Mexico’s stocks soared the most in three months and the currency and bonds gained after a government regulator said pension funds plan to sign an agreement to direct all new funds they receive over the next year into local assets.

 The Bolsa index’s 6 percent surge was the biggest among the 91 indexes tracked by Bloomberg while the peso led gains among the world’s major currencies and benchmark bond yields fell to a two-week low. Mexican pension funds are the nation’s biggest institutional investors with 968.5 billion pesos ($65.8 billion) in assets as of February.

This agreement may be signed “very soon,” said Domingo Soto, who manages 12 billion pesos in assets at Afore Coppel, one of the 19 pension funds. Managers are still discussing the proposal with their investment committees, he said.

The pension fund association is organizing the plan to help spur the local economy, said Vanessa Rubio, a spokeswoman at the industry regulator, known as Consar. Oscar Franco, president of the association of funds, which include Banco Bilbao Vizcaya Argentaria’s Bancomer fund and Citigroup Inc.’s Banamex fund, didn’t immediately return a telephone call seeking comment.

The peso advanced 2.5 percent to 14.7212 per U.S. dollar at 5 p.m. New York time, from 15.0931 yesterday. It has risen 5.4 percent over the past three days, rebounding from a record low of 15.5892 on March 9. Mexico’s Bolsa index of the 35 most-traded stocks jumped to 18,864.87, a one-month high.

Mexican pension funds may receive as much as $6.8 billion in new flows this year, UBS AG said in a note to clients. Mexico’s regulator “approves of the plan,” Rubio said.

“It’s a lot of money,” said Francisco Suarez, head of equity research at Actinver SA in Mexico City. It would mean “greater demand from institutional investors.”

Yields on Mexico’s 10 percent bond due December 2024 fell 11 basis points, or 0.11 percentage point, to 8.77 percent. The bond’s price rose 0.98 centavo to 110.47 centavos per peso, according to Banco Santander SA.