June 1 (Bloomberg) -- Peruvian stocks fell the most in seven weeks, the nation’s benchmark borrowing costs rose and the currency weakened on speculation a private poll shows former army renegade Ollanta Humala may win a June 5 presidential vote.
The Lima General Index dropped 5.9 percent to 20,283.93 at 4:34 p.m. New York time, its steepest decline since April 13. The sol fell 0.3 percent to a three-week low of 2.7782 per U.S. dollar, from 2.7694 yesterday.
Peruvian financial assets are tumbling on speculation that a private poll commissioned by an investment bank showed Congresswoman Keiko Fujimori’s lead over Humala narrowed to less than 1 percentage point, said Gonzalo Navarro, the head trader at Banco Santander in Lima. Separately, research company Eurasia Group said Humala will likely win a larger share of undecided voters in the “very tight” race, pushing him past Fujimori.
“A fall in support for Keiko in any survey would create anxiety,” said Navarro, who added that he hadn’t seen the private survey. “The race is completely open.”
Humala, a one-time ally of Venezuelan President Hugo Chavez, pledges to revise Peru’s free-trade agreements and change the constitution to strengthen the state’s role in the economy, while Fujimori has promised to preserve policies to draw foreign investment to the country.
The extra yield investors demand to own Peruvian government bonds instead of U.S. Treasuries increased to the highest level since May 11, rising six basis points, or 0.06 percentage point, to 195, according to JPMorgan Chase & Co.
Fujimori led by 4.1 percentage points in a poll by Datum issued May 29, compared with 5.1 percentage points in a May 26 poll. A May 29 survey by Ipsos Apoyo showed the candidates in a statistical tie.
Datum is preparing a poll for a client that will be ready June 3, Urpi Torrado, the company’s deputy general manager, said in an e-mailed response to questions. Peruvian researchers are barred by electoral laws from publishing the results of polls in local media in the week before the vote.
“Humala looks likely to win a larger share of undecided voters, who are mostly poor and therefore tend to be less concerned about the risks commonly associated with Humala,” Eurasia Group analyst Erasto Almeida said. “Despite the tight race, the risk of serious post-election political instability is low, even though a slow counting of votes could generate significant noise in the weeks following the election.”
Concern Humala, who topped the field in the first round of elections April 10, will win the presidential vote and slow the region’s fastest-growing economy drove the sol to a 10-month low of 2.8384 per dollar on May 2. The cost of protecting Peru’s debt against non-payment for five years with credit-default swaps rose to the highest since July 2009 on April 29.
The sol rose to a three-year high of 2.7454 on May 26 after Fujimori took a narrow lead in polls by Datum and CPI. Fujimori is the daughter of jailed former President Alberto Fujimori.
--Editors: Brendan Walsh, Richard Richtmyer
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