In the next few hours, Congress will elect a new president of the Republic who will take the reins of the country until next July 28. In this context, the stock market, as well as our currency, serve as thermometers to measure how investors are taking the situation.
What do these indicators say? The indices of the Lima Stock Exchange (LSE) have been trading positively since the morning. At 2:45 in the afternoon, the Peru General index gained 2.09% and the selective index returned 1.79%. The stock market still closes after 3 pm.
On the exchange rate side. According to the BCR, the dollar closed at S/3,353, which represents a slight increase compared to yesterday’s close of S/3,346, that is, it rose two thousandths.
For Renta4 SAB, the explanation that the thermometers do not register a warning signal is because “Peru continues to operate within its constitutional framework.”
The brokerage house explained that, although presidential rotation has become a recurring feature of the Peruvian political system, the current process does not represent an alteration of the institutional order or the electoral calendar.
“From a country risk perspective, the base scenario continues to be one of macroeconomic continuity. There are no signs of a rupture in monetary policy, fiscal management or respect for contracts. The economy continues to operate with controlled inflation, a credible Central Bank and solid external fundamentals”Renta4 stated in a report.
Peruvian shares in NY rise
Likewise, Alberto Arispe, general manager of Kallpa SAB, stated in a message to clients that the prices of the most liquid Peruvian assets have not changed negatively after censure of President Jerí.
He detailed that the EPU, the Peruvian stock package that trades in New York, has been rising 1.8%, while the shares of Credicorp, the most liquid Peruvian stock, have risen 3.7%, hand in hand with the rise in copper and emerging markets.
“Very unfortunately, the market seems to have discounted that Peru is a country where Congress removes presidents without a clear and transparent process, easily and quickly (in ten years we have had 9 presidents, at a rate of one president every 1.1 years), based on perceptions of mediocrity/corruption/others.“he said through his WhatsApp.
He explained that the market has discounted that under this context, Peru will grow around 3% per year in the next 3 years, with a fiscal deficit around 2% of GDP, low inflation and relatively low debt and with an inefficient State.
“If a pro-market candidate with a strong presence in Congress wins the elections, reducing the possibility of vacancies, prices will rise. If an anti-market candidate with a strong presence in Congress wins in the elections, prices will drop”said Arispe.
The economist stated that with current copper and gold prices and a “regular” government and some order, we could grow 6% and reduce poverty significantly.
“Unfortunately we are far from that. How many days will the new president last? Will it arrive on July 28?”, he reflected.
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