Bloomberg News

Peru Lures Inflows as Stocks Swing Most Since ‘08 on Humala

June 10, 2011

(Adds investor comment in fourth paragraph).

June 10 (Bloomberg) -- Peru equity funds attracted about $60 million of net inflows in the week ended June 8 as Ollanta Humala’s victory in presidential elections sent the benchmark index to a six-week low and spurred the most volatile trading since November 2008.

Investors added money to Peru even as they pulled about $220 million from all emerging-market stock funds, Jonathan Garner, the chief Asia and emerging-market strategist at Morgan Stanley in Hong Kong, wrote in a report today. Garner cited data compiled by Cambridge, Massachusetts-based EPFR Global.

Peru’s Lima general index plunged 12 percent on June 6 as the victory by former army rebel Humala sparked speculation his policies will deter foreign investment. The gauge has climbed the past three days as those concerns eased, leaving it down 1.3 percent this week. Humala said yesterday he plans to follow the Brazilian government’s socio-economic model of fast growth and prudent macroeconomic policies, combined with policies that seek to bring poor people into the middle class.

“Once he’d been elected he made some comments that signal he was moving towards the center and that he would focus on growing the economy,” Sven Richter, the London-based managing director of frontier markets at Renaissance Asset Managers, said in a phone interview. “It’s a market quite a few people are interested in.”

Stock Swings

The Lima General index’s 10-day historical volatility, a measure of share-price swings, jumped to 107 yesterday, the highest level since Nov. 3, 2008, according to data compiled by Bloomberg. The index’s price has declined 10 percent this year, compared with a 0.8 percent drop in the MSCI Emerging Markets Index.

Humala, the leader of Peru’s Nationalist Party, has backed away from a platform that called for changing the constitution to give the state a stronger role in the economy, including its ports and pension fund system. Humala said in recent weeks that he wouldn’t follow through with an earlier pledge to unilaterally impose a mining windfall tax.

The president-elect will ask mining companies to contribute more taxes while respecting existing contracts and ensuring Peru’s mining industry remains competitive with others such as Canada and Australia, Kurt Burneo, Humala’s chief economic adviser, said in an interview in Lima on June 8.

--With assistance from John Quigley, Helen Murphy and Alex Emery in Lima. Editors: Stephen Kirkland, Linda Shen

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net.


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