Peru Stocks Top Emerging Markets, Lima Index Gains 64%
Peru’s main stock index climbed the most among gauges for 21 developing nations in the MSCI Emerging Markets Index this year as prices for copper, the country’s largest export, surged to a record.
The Lima General Index rose for a sixth day, gaining 0.5 percent to a three-year high of 23,374.57 at 1 p.m. New York time. The measure has rallied 65 percent in 2010 after doubling last year, its steepest advance since 2006. The MSCI Emerging Markets Index increased 0.5 percent to 1,151.38 today, stretching its 2010 advance to 16 percent. The sol was little changed at 2.8063 per dollar and has strengthened 2.9 percent this year.
Candente Copper Corp. rallied today after futures contracts for the metal rose to an all-time high for the fourth time this week as speculation heightened that a supply deficit will widen. Rio Alto Mining Ltd. climbed as gold rose to a record closing price of $1,421.40 an ounce, capping the 10th straight annual gain, on demand for a haven from mounting sovereign debt. Silver posted the biggest yearly advance since 1979.
“We’re a very small economy with a very high potential for growth in comparison to many countries in the region,” said Leoncio Altamirano, a trader at Lima-based Juan Magot y Asociados SAB. “The market has been spectacular.”
Peru’s economy is headed for 9 percent economic growth this year, Finance Minister Ismael Benavides said this week. Surging prices for copper and gold have helped boost profits and returns for companies from Sociedad Minera Cerro Verde SA to Southern Copper Corp.
Rio Alto, a Canadian gold exploration company, led gains on the Lima General Index this year, soaring more than six-fold to $2.47.
The stock gained 2.1 percent today. The Thomson Reuters/Jefferies CRB index gauge of 19 raw materials has jumped 17 percent since the end of 2009. Silver rose 1.6 percent today, extending its advance to 83 percent.
An infrastructure boom also pushed Peruvian equities higher. The country is increasing projects as it compensates for deficiencies in housing, bridges and highways, Altamirano said.
“That’s another very dynamic sector that will remain strong in 2011,” he said.
Grana y Montero SA, Peru’s largest construction firm, gained 135 percent in 2010 to 6.65 soles. Cementos Pacasmayo SAA, the Hochschild Group’s cement producer, advanced 135 percent to 7.51 soles in 2010, its biggest ever yearly advance.
Peru’s benchmark of 36 stocks also completed its sixth straight monthly advance today, adding 12.1 percent in December as consumers stepped up buying for the holiday season.
Foreign direct investment rose 34 percent to $5.97 billion in the first nine months of 2010 from the same year-earlier period, the central bank said Nov. 29. Portfolio investments totaled $1.07 billion in the third quarter compared with $55 million in all of 2009.
The performance of China’s economy is the biggest “risk” for Peruvian markets, because the Asian nation will continue driving world metals prices, said David Ruiz, chief analyst at Lima-based brokerage Compass SAB.
China is poised to overtake Japan as the world’s second- largest economy this year.
Peruvians will go to the polls in 2011 to choose a president to succeed Alan Garcia, who can’t run for a second consecutive five-year term under Peruvian law.
“The issue of the elections is going to bring a certain type of volatility, for example in the exchange rate,” said Ruiz, speaking in a telephone interview from Lima.
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