Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Investing in Peru, South America’s Hidden Gem

Stock-Markets / Emerging Markets Apr 08, 2010 - 06:45 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleMartin Hutchinson writes: When investing in the emerging markets, you need to cast your net beyond the obvious candidates. Granted, China, Brazil and India have emerged to become very attractive investment stories (I don't trust Russia, the fourth and final "BRIC" economy).


But everyone else has heard of them, too, which is why their markets have been bid up very high in the past year. Their prospects remain excellent, but you're paying a lot for them.

From time to time, however, a country that has been off investors' radar screens has a few good years, and begins to creep onto them. In such countries, risk may be high, but values at least remain reasonable.

That's why it might be worth investing in Peru.

When U.S. investors look at the countries of Latin America, they do so with great suspicion - and with good reason.

Mexico has proved to be a sinkhole for U.S. money for two generations. Argentina hasn't been quite as costly for Americans - even with its recent retirement-fund debacle - but only because the Europeans dived in first. Venezuela has been a disaster and even Brazil has proved very disappointing.

Despite that history, Brazil last year proved just about the best place you could have placed your money. And Chile currently appears not only very attractive, but safe. After all, in an era of perpetually rising commodity prices, doesn't it make sense to invest in commodity-producing countries?

That brings us to Peru.

At first glance, Peru looks mired in the category of countries a U.S. investor should avoid at all costs. If three of the top factors to a market's success are "location, location, location," then Peru has a big strike against it, for it's in a bad neighborhood: Two of its neighbors are Bolivia and Ecuador, places where no sane person would invest a penny, given their awful current regimes.

One of Peru's more recent presidents, Alberto Fujimori, who served from 1990 to 2000, is now serving another term - this one a jail term ... of 25 years. And quite frankly, the fact that his daughter, Keiko Fujimori, is currently leading in opinion polls for the April 2011 election doesn't add to one's confidence either. Either Fujimori was unjustly imprisoned - in which case the Peruvian justice system is a travesty (the view I incline to) - or he deserved what he got, in which case the Peruvian electorate is dangerously deluded. You can't have it both ways...

Nevertheless, Peru's economy has showed considerable strength in recent years, growing by around 9% annually in both 2007 and 2008 and even managing a little growth in 2009. You need to net out the somewhat-excessive annual population growth of 1.2% to get a per capita growth figure, however, and the country remains relatively poor, with per-capita gross domestic product (GDP) of $8,600 at purchasing power parity (PPP), well below Chile's $14,700 or Brazil's $10,200, for example.

The current president, Alan Garcia Perez, governed as a leftist maniac in the 1980s, but is a somewhat reformed character now, and has left alone most of the property-rights reforms - such as reliable land registry reforms that were instituted by Fujimori in his 1990s decade of rule. Foreign investment is officially welcomed, and corruption remains tolerable - in the 2009 Transparency International Corruption Perceptions Index, Peru ranked 75th out of 182 countries, level with Brazil.

Nevertheless, with commodities prices trending upward, Peru should continue to do well - its Top Four exports are copper, gold, zinc and crude oil, before you get to a group of agricultural products. The Economist team of forecasters predicts growth of just over 5% in 2010 and 2011, and that forecast may prove low if metals and energy prices continue strong. So, on balance, attractive investment opportunities in Peru should be considered.

There are a number of U.S. and Canadian mining companies with operations in Peru, such as Pan American Silver Corp. (Nasdaq: PAAS), which should be reasonably safe from expropriation even if metals prices continue to rise. There is also one interesting Peruvian-controlled miner listed on the New York Stock Exchange - Compania de Minas Buenaventura SA (NYSE ADR: BVN) - that benefits from very favorable operating costs in its gold operations at below $300 per ounce and trades at less than 14 times trailing earnings, a very reasonable rating in this sector.

Peru may be emerging as an investment destination; it certainly bears watching. But take care; with an unpredictable election next April and a strong leftist candidate in Ollanta Humala (who lost by only 5% in 2006) there is considerable political risk. Still, there is also upside risk - a victory by Keiko Fujimori would certainly clear up some of the country's ambiguities!

Source : http://moneymorning.com/2010/04/08/investing-in-peru/

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules