Mexico's Afores recovering from 2018 market losses

The head of Mexico's pension fund regulator (Consar), Abraham Vela, said the investment losses recorded by the country's pension fund managers (Afores) at the end of 2018 have already begun to reverse.

In an earlier statement, Consar said assets under management at the Afores declined by 9.55bn pesos (US$498mn) last year, or 0.27% of total AUM - largely the result of volatility in global financial markets in the fourth quarter.

Vela, in a Wednesday telephone interview with local media group Televisa's morning program, countered claims that the losses were also due to impacts from the cancellation of Mexico City's international airport in late October, saying that the operator for the project had assured that the funds invested in the airport were safe.

"At the country level there was an increase in the perception of risk by domestic and foreign investors and this increase in the perception of risk was reflected in disabilities in many instruments, not necessarily those in which the Afores have their resources invested," said the official.

"It is important to point out that these losses were recorded by many financial intermediaries. Obviously the Afores are under the magnifying glass, because they are the savings of the workers, but the banks, trading houses and any other type of financial intermediaries also suffered handicaps," Vela added.

The Afores' recovery began in December when capital gains of 28bn pesos were registered, while in January and February there have been gains of little more than 100bn pesos, said Vela.

"Our daily valuation calculations of Afores' portfolios show us that we already have capital gains of approximately 100bn pesos so far this year, they change a lot from day to day but there is a clear upward trend."