Peru ETF’s Pain Hides a Fast-Growing Market

Jan.18.11 | About: iShares MSCI (EPU)

Peru’s ETF got slammed in the markets last week. In just five days, iShares MSCI Peru (NYSEARCA:EPU) lost 4.7%. Is it time to stick a fork in the Latin American country?

Peru’s central bank moved to limit speculative inflows and tamp down inflation last week, unexpectedly bumping up interest rates while raising reserve requirements for banks, says Bloomberg. A dip in copper prices didn’t do EPU any favors, either; copper is the country’s biggest export.

But long-term, Peru is on track to be one of Latin America’s fastest-growing countries:

  • The commodity-driven economy has been forecast to grow 9% this year.
  • Industrial production is forecast to grow 7% this year.
  • Elections are coming in April, and all three of the leading candidates favor the market-friendly policies that have helped Peru grow as much as it has in recent years, says The Wall Street Journal.

EPU may also benefit from an infrastructure boom, which has pushed Peruvian equities higher. The country is increasing projects as it compensates for deficiencies in housing, bridges and highways, giving the underlying commodities a boost as well.

Tisha Guerrero contributed to this article.

Disclosure: None