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Geo Rebound From 10-Year Low Leads Mexican Homebuilders Higher

Corp. Geo SAB (GEOB), Mexico’s second-biggest homebuilder by sales, rebounded from a 10-year low as volatility surged amid speculation about how President Enrique Pena Nieto’s housing policies will affect the industry.

Geo climbed 21 percent to 5.02 pesos as of 2:31 p.m. in Mexico City. The stock’s 30-day volatility, a measure of price swings, increased to the highest since 1998, according to data compiled by Bloomberg. Desarrolladora Homex SAB, the country’s biggest homebuilder, advanced 9.2 percent. Urbi Desarrollos Urbanos SAB, the third-biggest, jumped 11 percent. The benchmark IPC index fell 0.4 percent.

Shares of Mexico’s biggest homebuilders have plummeted this year, pushing the Habita gauge of six stocks down 56 percent, as they struggle to adapt to changes in the industry. Government subsidies on which the builders depend for growth have been shifting toward development of capital-intensive apartment buildings in urban areas over single-family houses in commuter towns or the countryside, crimping cash flows.

“All the news in the short-term is very uncertain, and the volatility will continue to be very high,” Jorge Lagunas, who oversees about $200 million in stocks at Grupo Financiero Interacciones SA, said in a telephone interview from Mexico City. “It’s totally a coin flip in the short term.”

Geo has lost 67 percent this year, while Urbi sank 76 percent and Homex retreated 60 percent.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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