Peru presidential election goes to run-off

NEW YORK Mon Apr 11, 2011 1:37am EDT

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NEW YORK (Reuters) - Leftist Ollanta Humala won the first round of Peru's presidential election on Sunday but he did not win a majority according to exit polls and will now likely face rightist lawmaker Keiko Fujimori in a run-off.

Fujimori's exit poll lead over the third-placed candidate -- former Finance Minister Pedro Pablo Kuczynski -- was narrow, meaning the former Wall Street banker could still have a chance of contesting the June run-off.

Despite a decade-long economic boom, a third of Peruvians live in poverty and low-income voters were expected to hand the first round of voting to Humala, a former army officer who has softened his tone since narrowly losing the 2006 race.

KEY POINTS:

* Although exit polls put Fujimori second, the run-off line-up could change as official results come in.

* Both Humala and Fujimori have high disapproval ratings of about 50 percent, so a run-off pitting them against each other would pose a dilemma for voters who did not support them in the first round. A Humala-Kuczynski run-off would also be close.

* The key to victory in what looks to be a close contest will lie in the candidates' ability to win over skeptics and play down their weaknesses in the coming two months.

COMMENTS:

ALBERTO BERNAL, HEAD ANALYST, BULLTICK CAPITAL MARKETS, MIAMI

"It's a pretty convincing win, but it's a long period from this one to the next one. There is going be a lot of talk of alliances and we'll see who goes with whom. I'm pretty sure everybody is going to endorse Fuijimori one way or another.

"The problem for the markets is that this does not necessarily mean that everybody is going to follow those votes.

"What's relevant for the second-round vote is to see how well Fuijimori performs in the campaign and see how much dirt they can get on Humala. That's what will start now, negative campaigning. It is the only option to contain Humala because he's having a very clever campaign, which is to look very centrist to try to appease some of the complaints about what he had said before.

"I'm pretty sure that Humala is what he is. He's a very, very left-wing person that doesn't really believe in capital markets, He's not as extreme as (Venezuelan President Hugo) Chavez, but on a barometer from zero to 100 I would give him 80 percent.

"It is bad news for markets, it's not going to be positive performance tomorrow. I'm 97 percent sure it's going to be a very bad day for markets."

ALBERTO RAMOS, SENIOR ECONOMIST, GOLDMAN SACHS, NEW YORK:

"It's going to be a very interesting second round because the first simulations to a second round show a very tight race between Humala and Keiko.

"It's definitely an issue that the rejection rate is high and that gives an angle for the other candidate to exploit whatever attributes the candidates have that led to that negative rejection rate. That probably increases the order of a negative campaign.

"To a certain extent this is in line with what the polls were already suggesting so this is not that much of a surprise that both of them will have advanced to the second round. That's pretty much already in the price.

"The market now will be looking at the first indications of what the second-round polls will indicate, and what was the margin of victory of Humala in the first round. If he manages to get closer to 30 percent, that makes him a little more viable for the second round."

EDUARDO SUAREZ, SENIOR EMERGING MARKET STRATEGIST, RBC

CAPITAL MARKETS IN TORONTO:

"Humala actually came out stronger than many had expected. The second rounds in Peru are usually very hard to predict from surveys. but it does seem like it's going to be a close call from the information we have from previous surveys.

"My guess is we probably will have a negative reaction by the Peruvian market tomorrow. Most surveys had Toledo as the candidate most likely to beat Humala in the second round.

"I would expect the spreads to once again widen somewhat and probably the credits to sell off."

OSCAR VIDARTE, POLITICAL PROFESSOR AT CATHOLIC UNIVERSITY:

"Imagining a hypothetical second-round between Ollanta and Keiko, they can't do any more to hurt him after the first round ... the (Hugo) Chavez card, the state-control card, the reform card. There's nothing left to attack him with.

"In Fujimori's case, things could be a bit more complicated. In the first round, she's had an easy time of it. She hasn't face many attacks, but she has a number of issues against her."

ALEJANDRO DEUSTUA, PROFESSOR IN INTERNATIONAL RELATIONS:

"It's not a surprising result. I don't think it's the result the country deserves ... although we still need to see who will reach the second round against Humala.

"Humala is a case that requires further study. It's clear that over the past years there has been a hidden vote that represents a sense of discontent and that feeling has been reflected in the voting."

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