• Sol is trading at its strongest level since November 2015
  • S&P BVL Index is world's best performer among major indexes

Peruvian stocks climbed the most since 2008 as the sol and bonds rallied after two market-friendly candidates made it to the second-round presidential vote.

The S&P BVL General Index jumped 8.4 percent to 12,491.75 as of 11:13 a.m. in Lima, its biggest surge since November 2008. Yields for Peru’s dollar bonds due in 2027 retreated 16 basis points to 3.51 percent, and the sol advanced 2.6 percent to 3.2930 per dollar, its strongest level since November 2015, according to prices from Datatec.

Investors’ appetite for Peruvian assets got a boost after the presidential candidate who advocated higher corporate taxes and mining industry restrictions failed to make the cut in Sunday’s election. Veronika Mendoza is out of the running after Keiko Fujimori, the right-leaning daughter of jailed former-president Alberto Fujimori, earned the most votes. Fujimori will face off against pro-market candidate Pedro Pablo Kuczynski in the second-round election to be held June 5.

Fujimori and Kuczynski “have very similar views on economic policy and are likely to continue the current government’s relatively market-friendly policies," Adam Collins of Capital Economics, wrote in a note to clients. "Both have also emphasized the need to reduce red tape and simplify the tax system, as well as to continue investing heavily in infrastructure."

Monday’s rally helped make up for some of the losses that Peru investors had suffered in recent weeks as Mondoza rose in popularity polls. With Mendoza out of the picture, Citigroup Inc. strategists Dirk Willer and Kenneth Lam recommended closing a bet that the sol would weaken versus the dollar and moved the currency to neutral from underweight in its Emerging Markets bond portfolio, according to a report.

The extra yield, or spread, investors demand to buy Peru’s 2026 bonds in euros fell 18 basis points, or 0.18 percentage point, to 245 basis points. That’s the steepest decline since the bonds were first sold in October. The spread on its dollar bonds due in 2025 narrowed 14 basis points to 156 basis points.

The cost of insuring the bonds against non-payment also tumbled. Peru’s five-year credit-default swaps fell 17 basis points to 170 basis points, the steepest decline since December 2014.

Mining stocks led gains on the Lima stock exchange, with Minsur SA advancing 26 percent and Volcan Cia Minera SAA jumping 25 percent. The S&P BVL General Index’s gain on Monday made it the world’s best performing equity benchmark, with an 11 percent increase in dollar.

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