The Peruvian asset market ended yesterday’s session in positive territory. The dollar rate closed at S/3,753, a reduction of 0.08% compared to the previous day; general index of the BVL rose 1.38% and, on average, the interest rate on Peruvian bonds fell by between 7 and 8 basis points.
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As expected by investors, after more than four years, the US Federal Reserve (FED) made its decision to cut its monetary policy rate concrete, although surprisingly, after doing so by 50 basis points, when the consensus expected it to be 25.
Thus, the FED rate was set in a range of 4.75% and 5%, which leaves room for the Central Reserve Bank (BCR), whose rate remains at 5.25%, to continue with the monetary stimulus.
“The FED’s decision gives us a positive perspective on interest rates. As they begin to fall, it leads to an appreciation of fixed-income investment instruments (bonds). This also makes investors want to invest in something more risky, giving a boost to variable income (shares),” said Eloá Aguirre, local head of Fixed Income at SURA Investments.
Fixed income
Both Aguirre and Seminario SAB’s senior investment analyst, Sebastián Cruz, agreed that the FED’s rate cut provides room to direct and increase investments in local fixed income. Because when rates are lowered, the price of these assets (due to the inverse relationship between price and interest rates) begins to rise, increasing returns.
Aguirre added that this is also good news for families and businesses, as it leads to a reduction in the cost of credit.
Equity
Daniel Guzmán, general manager of Credicorp Capital Bolsa, said that, following the FED’s decision, the shares of the Credicorp holding company (BAP), as well as Intercorp Financial Services (IFS) rose by around 2.5%.
According to Guzmán, some investors who were betting on shares of companies in developed markets will gradually come to the BVL in search of more profitable alternatives.
He said that this momentum is compounded by the fact that local companies are relatively cheap compared to a year ago, and that they are also recording good results.
“This (FED policy) opens opportunities for all risky assets, especially the Peruvian stock market, which is important in terms of copper investments,” said Alberto Arispe, general manager of Kallpa Securities SAB.
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