An exchange traded fund indexed to Peru has seen huge swings as investors have dealt with political uncertainty leading up to and after the recent presidential elections.
The Peruvian economy is showing strong growth but the ETF fell sharply after Ollanta Humala, former lieutenant colonel and left-wing candidate, won the election.
Peru’s financial markets and conservative businesses fear that Humala will increase government control of and impede economic growth if elected, reports Maja Wallengren for Xinhaunet.
“We have a country which has grown at between 6% and 9% in the last decade,” commented Peru’s former Minister of Foreign Trade Alfredo Ferrero, “and it’s very unlikely that whoever wins the elections will do anything that puts economic model of growth at risk.”
The iShares MSCI All Peru Capped Index Fund (EPU) has bounced somewhat after its steep decline, but still appears caught in a downtrend.
“In the next few weeks, it will be interesting to see how politics will affect the performance of Peru’s markets,” writes Don Dion at TheStreet.com. “Miners, which account for a large percentage of EPU’s index, could take a hit in the event that the newly elected president attempts to raise taxes.”
iShares MSCI All Peru
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Max Chen contributed to this article.