Credifondo Bets U.S. Growth to Spur Peru Mining Stocks Gains

Credifondo SA SAF, Peru’s largest mutual-fund manager, is betting mining stocks will gain “in the medium term” amid growing confidence that the global recovery will pick up, Chief Executive Officer Augusto Rodriguez said.

The Lima General Index, where 14 of the 35 stocks listed are mining companies, is on course for a 15 percent gain this year, Rodriguez said. Base and precious metals stocks such as Southern Copper Corp. and Cia. De Minas Buenaventura SA are “a good combination,” he said.

“Assets making gains this year are those linked to internal demand because of Peru’s economic performance, while mining assets are undervalued due to international metals prices,” Rodriguez said today in an interview in Lima. “When the bad news abroad abates, there will be more upside” for mining stocks, he said.

The U.S. economy will probably expand 3 percent next year, while the situation in Europe isn’t expected to worsen, and China will grow at rates of at least 7 percent annually, Rodriguez said. The Lima Stock Exchange also absorbed the impact of protests that postponed projects by Newmont Mining Corp. and Southern Copper, while other companies are advancing “important” projects, he said.

Phoenix-based Southern Copper fetched 12.5 times book value today after trading at a ratio of 26.3 in December 2010. Lima-based Buenaventura traded at a ratio of 11.3, compared with 66.1 in December 2009.

The Lima General Index fell 1.1 percent to 21,432.79 today following a two-day public holiday.

Strengthening sol

Credifondo today added a sol-denominated equity fund in response to increasing investor demand for local-currency funds as the Peruvian sol climbed to a 15-year high, Rodriguez said.

“We expect the currency to appreciate further due to foreign investment inflows through at least 2015,” he said. “Peruvians today prefer to save in soles rather than dollars.”

The sol was little changed at 2.5990 per dollar at the close of trading today, according to data compiled by Bloomberg. The currency has gained 6.9 percent over the past 12 months, the fourth-best performance in the region.

The 63 mutual funds operating in Peru had $6 billion in holdings through the end of August, 22 percent higher than a year earlier, according to Peru’s Banking Association.

Credifondo is a unit of Credicorp Ltd., Peru’s biggest financial services company.