Peru Election 2006

Note: we have added an article published in El Comercio today on the subject and a chart below outlining the evolution of the stock market during the last two days.
Foreign investors are starting to recognize that Flores may not make it into the second round. It will not take long for them to start to see Garcia as their salvation. Here is a comment from someone who knows investment circles well. The comment was made just before the election:
“…the sense is that, at least last week, investors in New York were slowly recognizing that Flores could not reach the second round. They had also more or less ‘priced in’ a victory by Humala, even in a second round, but as some investors told me, they were waiting to see what Humala does before giving up on Peru completely (I thinks there was also some hope that Flores could in fact win). The question everyone had was what would Humala do once in power. I don’t think the idea that Garcia could win is out there yet, but will soon. I have the impression that Garcia could actually defeat Humala (in fact, ___ told me this was their biggest fear, that Flores would not reach the second round). In this sense, I think prices of Peruvian assets will probably fall significantly on Monday, and for a while until people realize that AG is their favourite. The question will then become, at least here, if Garcia’s moderation is credible. People here will start wondering if Alan is the new Lula, and he can really exploit that if he wants.”
The same source goes on to talk about investors who were in virtual denial about the possibiliy of Flores failing to make it into the second round. I met with one financial analyst who had spent a couple of days in Lima before the election and was assured by senior government officials that all was well and Flores was a good bet and would win a second round easily. If Flores does not make it to the second round, there will be some shock in these circles. Once the shock subsides, there may be two consolations for investors. First, Humala’s relatively modest victory comes as a relief (see recommendations by Merrill Lynch and JP Morgan). Assuming Garcia holds his precarious lead, investors may come to see him as the lessor evil (from their perspective). Only APRA can save investors?

Source: El Comercio, 12 de abril del 2006

Peru’s Bonds, Stocks Fall as Flores Loses Presidential Vote
Bloomberg
April 11 (Bloomberg) — Peru’s bonds, stocks and currency fell after a fresh tally from a first-round presidential election showed free-trade advocate Lourdes Flores lost.
The results mean former President Alan Garcia would face nationalist candidate Ollanta Humala in a runoff vote next month. Both contenders worry investors, said Franco Uccelli, an analyst at Bear Stearns Cos.
“The stars would have to align for this to be positive,” Uccelli said in a telephone interview from Boca Raton, Florida. “It’s certainly tough for the markets.”
The Lima General Index tumbled 2.6 percent to 6170.48 at 1 p.m. New York time, the biggest fluctuation among the world’s equity indexes. The sol fell 0.5 percent to 3.345 per dollar. The yield on Peru’s 9 7/8 percent bond due in 2015 rose to 7.3 percent from 7 percent, according to JPMorgan Chase & Co. The price dropped 1.5 cents on the dollar to 116.5.
Garcia, 56, whose promises to boost spending won him support among young Peruvians and pensioners, defaulted on foreign debt as president between 1985 and 1990 and oversaw a period of hyperinflation, with consumer prices doubling daily. . latest election results from last weekend’s first-round vote.
Humala, a 43-year-old former army colonel, vows to fight the multinational companies he says are looting the nation’s mineral resources and spend more on education and health.
Flores Factor
Before the markets closed yesterday, Peru’s electoral results showed Flores, a lawyer who endorses a free trade agreement with the U.S. and more foreign investment, heading into the runoff against Humala.
The benchmark stock index surged as much as 5.7 percent yesterday on optimism Flores had enough support to win the second-round, before closing up 2.3 percent at 6333.83. The Peruvian sol rose 0.9 percent to 3.3270 per dollar. The yield on Peru’s 9 7/8 percent bond due in 2015 fell 0.18 percentage point to 7.16 percent.
“Markets reacted positively on the prospect that Flores would face off Humala in a second round,” said Rafael de la Fuente, chief Latin America economist at BNP Paribas in New York. “It was a premature reaction considering polls have shown voters change their minds very fast, so nothing can be ruled out yet.”
Latest Results
With 84 percent of ballots counted, Humala had 30.8 percent of the vote, followed by Garcia with 24.7 percent and Flores with 23.6 percent, according to Peru’s electoral board.
Flores today said she still expects to enter the runoff election after the electoral board counts votes from Peruvians living overseas. She said she expects to win 85,000 votes from abroad.
Garcia would need backing from Flores, whom he also overtook in the first round of elections in 2001, to beat Humala, said Uccelli.
A survey published last week by Lima pollster Apoyo Opinion y Mercado showed Flores beating Humala in a runoff by 55 percent to 45 percent, while Humala would beat Garcia by 51 percent to 49 percent. The poll of 2,000 people had a margin of error of plus or minus 2.2 percentage points.
The government budget deficit would widen and inflation probably would accelerate under either Humala or Garcia, said Juan Lindau, a political scientist at Colorado College in Colorado Springs.
`Serious Consequences’
“Peruvians could confront some pretty serious economic consequences,” Lindau said. Both have made “explicit populist promises,” he said.
Peru’s economy has expanded at an annual 5 percent clip since President Alejandro Toledo took office in 2001, led by surging exports of copper, gold and other commodities. Peru is the world’s fourth-largest producer of copper, the fifth in gold, the third of zinc and the largest of fish meal. The country has Latin America’s fifth-largest reserves of natural gas.
Toledo’s government trimmed Peru’s deficit to 0.4 percent of gross domestic product from 2.5 percent in 2001. The inflation rate is the lowest in the region at 2.5 percent in March.
Humala won support among Peru’s 13 million poor by arguing they haven’t benefited from the nation’s economic stability and growth. Half of Peru’s 27 million inhabitants survive on less than $1 a day, according to Farid Matuk, director of the National Statistics Institute in Lima.
Chavez, Morales
A Humala victory would put Peru in the camp of Venezuelan President Hugo Chavez and Bolivian President Evo Morales, who favor curbing company profits to help the poor benefit from the region’s oil and mineral wealth.
Under a Humala presidency, “there will surely be changes but these changes won’t be as radical as he makes people believe,” Daniel Linsker, an analyst at London-based Control Risks group, said in an interview. “Humala won’t be able to pull off a Chavez-type revolution because Peru doesn’t have Venezuela’s oil wealth.” Venezuela is the world’s fifth-largest exporter of oil.
Humala said in an interview yesterday with Venezuela’s Telesur television station that he plans to clarify his position and reach out to voters who were turned off by his message. He said his message had been “distorted” by his opponents.
Flores, 46, a former legislator seeking to become the Andean nation’s first woman president, campaigned on pledges to support free trade with the U.S., grant greater access to credit and training for farmers and small businesses and respect contracts signed between the government and investors.
To contact the reporter on this story:
Alex Emery in Lima at at aemery1@bloomberg.net
Last Updated: April 11, 2006 13:08 EDT
Merrill y JP Morgan suben recomendación sobre Perú
Reuters
Nueva York (Reuters) – JP Morgan y Merrill Lynch dijeron el martes que compraron bonos de Perú y subieron su recomendación sobre la deuda de ese país, luego de que el candidato Ollanta Humala ganara las elecciones presidenciales por un margen menor al pronosticado en las encuestas.
JP Morgan llevó a Perú a “por encima del promedio del mercado” desde neutral en su modelo de inversiones, mediante la compra de 2 millones de dólares en bonos peruanos con vencimiento en el 2012 .
Por su parte, Merrill Lynch volvió a llevar la deuda peruana a “neutral” tras haberla ubicado a “por debajo del promedio del mercado” el 20 de marzo debido a la incertidumbre sobre el panorama electoral.
Merrill Lynch dijo en un comunicado que implementará su decisión comprando bonos soberanos de Perú con vencimiento en el 2025 .
El martes, el candidato nacionalista Humala mantenía el liderazgo en las elecciones presidenciales con el 30,85 por ciento, mientras que sus dos rivales peleaban voto a voto para ver quién lo acompañará en una segunda vuelta.
El candidato socialdemócrata y ex presidente Alan García se ubicaba detrás de Humala con el 24,70 por ciento, superando a la conservadora Lourdes Flores, que obtenía el 23,59 por ciento con más del 84 por ciento de los sufragios escrutados.
Ambos bancos de inversión coincidieron en que la falta de un voto “oculto” a favor de Humala debería dar un respiro a los mercados, ya que tanto Flores como García quedarían en una posición más fuerte para ganar en una segunda vuelta.
JP Morgan señaló que “los amplios diferenciales de Perú no están justificados por los fundamentos, por lo que un panorama electoral más benigno provee un punto de entrada atractivo”.
En operaciones en el mercado luego del mediodía, el bono global de Perú con vencimiento en el 2012 subía 0,750 para ofertarse en 110,000 con un rendimiento de 7,007 por ciento. Su bono global con vencimiento en el 2025 ganaba 1,250 para ofertarse en 97,250 con un rendimiento de 7,623 por ciento.
Los llamados a la concertación evitaron mayor caída de la bolsa
Luis Corvera Gálvez
El Comercio, 12 de abril del 2006
BVL cayó 2,83% hasta el mediodía, pero al cierre la baja fue de 1,82%. El dólar llegó a venderse a S/.3,37, pero finalmente cerró en S/.3,345
“Hay un sentimiento encontrado entre los inversionistas”, comenta Gonzalo de las Casas, gerente de inversiones de AFP Integra, al referirse al comportamiento de la bolsa y las cotizaciones del dólar y la deuda peruana. “Es evidente cuál es la preferencia del mercado”, añade, en referencia a la simpatía que existe hacia Lourdes Flores. Sin embargo, “para el mercado hoy es poco probable que gane (Ollanta) Humala –quien no les genera mucha confianza–, y quien le gane tendrá que gobernar en coalición (lo que puede dar cierta calma)”, precisa.
Y es ese sentimiento encontrado el que se habría reflejado ayer en la bolsa. Desde su apertura hasta las 11:40 a.m., el índice general estuvo cayendo (llegó a registrar una contracción de 2,9%) y las operaciones no eran muchas (512 por un total de S/.13,9 millones), a pesar de que los precios de los minerales siguen subiendo. Pero los mensajes de Flores y Alan García respecto de la necesidad de una concertación con quien quede tercero –para ganar la elección y luego gobernar– calmaron a algunos. Y por ello y los bajos precios de las acciones, el índice empezó a repuntar y las operaciones a incrementarse. Al final de la jornada, la bolsa cayó 1,82% y se registró 1.151 operaciones (S/.53,3 millones).
MEJOR DESDE AFUERA
“En el extranjero le dan más margen de duda a García que los peruanos”, refiere De las Casas, al explicar el porqué los bancos de inversión Merrill Lynch y JP Morgan elevaron su recomendación de compra sobre los bonos peruanos. Además, añade, “cuando entró Lula a la presidencia de Brasil, los inversionistas que habían salido y regresaron no pudieron recomprar los papeles que tenían al precio al que vendieron y lo mismo les pasó en Argentina, así que se presume que no quieren que les ocurra de nuevo con el Perú”.
Y ello se podría desprender de la nota de prensa del JP Morgan para justificar su acción. “Los amplios diferenciales (de los papeles de deuda peruanos) no están justificados por los fundamentos, por lo que un panorama electoral más benigno (con Flores o García, en lugar de Humala) provee un punto de entrada atractivo”, decía.
UNA MERA ESPECULACIÓN
El comportamiento del dólar interbancario, de otro lado, fue muy parecido al que registró la bolsa. Llegó a venderse en el mercado interbancario hasta en S/.3,37 hacia el mediodía, pero al cierre (1:30 p.m.) se redujo a S/.3,345. Sin embargo, para Kurt Burneo, director del BCR, tal comportamiento tendría un componente especulativo, tal y como ya lo ha sugerido Eduardo Iriarte, también director del BCR. “El tema electoral es una coartada de quien quiere hacer ganancias especulativas”, comentó el funcionario.
“Es cierto que hay problemas de liquidez, pero incluso el Banco de la Nación ha entrado a otorgar créditos interbancarios para darle liquidez al sistema”, explica Burneo, quien también es presidente del banco estatal. “El viernes prestamos S/.500 millones y el lunes otros S/.500 millones”, dijo el funcionario.
Se redujo emisión de bonos en marzo
El Comercio, 12 de abril del 2006
Tal y como se había observado en el mercado el último mes, la Conasev confirmó que en marzo las colocaciones de bonos en el mercado primario (S/.30 millones) fueron significativamente menores a las que se venían registrando en los meses previos (en enero y febrero se colocó US$140 y US$170 millones, respectivamente).
En total, solo se realizó ocho colocaciones durante ese mes, siendo las de mayor envergadura las del BCP y el BBVA Continental, que colocaron bonos corporativos por S/.25 millones y S/.23 millones, respectivamente. La novedad del mes fue la emisión de papeles comerciales de tiendas Efe por S/.300.000.
Las escasas colocaciones de bonos y otros instrumentos de renta fija se explicaron por el incremento de las tasas de interés exigidas por los potenciales compradores (AFP, fondos mutuos y compañías de seguros de vida), ante la incertidumbre electoral. Incluso el gobierno, que tenía previsto colocar bonos a fines de marzo, finalmente no lo hizo.