Behind Peru ETF’s Pain is a Fast-Growing Market
January 16th, 2011 at 1:00am by Tom Lydon
Peru’s exchange traded fund (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. [5 Latin American ETFs to Watch.]
- Industrial production is forecast to grow 7% this year. [ETF Spotlight: iShares MSCI Peru.]
- 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.
iShares MSCI Peru (NYSEArca: 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.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.