Humala on a shining path forward!!!

Peru’s stocks tumbled the most in two years and dollar bonds fell after former army rebel Ollanta Humala claimed victory in the country’s presidential runoff yesterday and sparked concern that he will seek greater state control of the economy.

I think his election represents a great buying opportunity.  Excluding Mr. Chavez, most of the former populist revolutionaries of the Southern Cone have become quite pragmatic in their maturing years.  Humala is no Chavez; he is more in the camp of Lula de Silva of Brazil.

Humala defended policies that have made Peru the fastest growing Latin American economy over the past decade.  Some investors may be concerned he will raise mining royalties and impose greater state control over natural resources.  My guess is that they should be more worried about England’s treatment of taxes in the North Sea!!!

Peru’s benchmark Lima General Index of stocks sank the most since October 2008, retreating 8.7 percent to 19,378.78 at 9:38 a.m. New York time.  Yields on dollar-denominated bonds due 2037 rose 17 basis points, or 0.17 percentage point, to 5.91 percent, according to data compiled by Bloomberg.

The cost to protect Peru’s debt from non-payment with credit-default swaps jumped 20 basis points to 168, the highest since April 27, according to data provider CMA in London. The sol weakened 0.3 percent last week to 2.7631 per U.S. dollar.

Peru is the world’s top silver producer, third in copper and zinc and sixth in gold. It has vast oil and gas reserves.

Good stock bets are (not to mention the currency and bond plays):

Southern Copper Corp. (SCCO), Peru’s biggest producer of the metal, fell 8.6 percent in U.S. trading to $31.73.

Hochschild Mining Plc (HOC), a producer of silver in Peru, fell to its lowest in four months in London trading, declining 8.7 percent to 498.8 pence.

Viva Zapata!!!