“On the macroeconomic front, Peru’s real GDP growth rate may have lurched downward 5.2 percentage points from its ten percent, post-recession, second-quarter 2009 high. Yet, the fact that the economyexpanded at a healthy 4.8 percent clip during the first three months of the year, in the face of debilitating demand from China and elsewhere for the nation’s raw materials, manifests the gradual evolution of the macro-economy from one exclusively dependent on exports to a modestly more mature one that can tap into other sources of growth – namely, direct foreign investment,” said S&P Capital IQ.

In April, the International Monetary Fund forecast 2014 GDP growth of 5.5% for Peru. That compares with 4.5% for Colombia and just 1.8% for Brazil. Brazil and Colombia are South America’s largest economies. The IMF expects Peruvian GDP to rise 5.8% next year and noted the country’s 2.5% rate of inflation is the second-lowest in Latin America behind Colombia. [Peru ETF Looks to Keep up With LatAm Rivals]

There is room for P/E multiple expansion, although Peruvian stocks are pricey compared to long-term averages. Lima-listed shares also traded at a premium to the broader Latin America region.

“At 15.2x 2014 forward earnings, Peru’s price/ earnings ratio (p/e) is well below that of Mexico and Colombia (18.5x apiece), but counter-intuitively above that of Brazil (11.4x) and Latin America (13.5x) – both of which have been oddly outperforming Peru. Furthermore, even though Peru’s p/e exceeds both its historical average (10.5x) and record low (2.8x), it falls short of its all-time high by 13.3 points, leaving considerable room for expansion,” said S&P Capital IQ.

iShares MSCI All Peru Capped ETF