April 11, 2016 / 7:35 PM / 4 years ago

EMERGING MARKETS-Peru sol posts biggest daily gain in 20 years; Brazil real jumps

By Bruno Federowski
    SAO PAULO, April 11 (Reuters) - The Peruvian sol posted its
biggest daily gain in two decades on Monday after the defeat of
a leftist presidential candidate dashed fears of a retreat from
the free-market policies that have governed the nation for a
quarter century.
    The country's select stock index jumped 8.4
percent, its best performance since 2008. Peru's stocks and
currency had suffered in the run-up to the election as leftist
Veronika Mendoza's rise in opinion polls sparked calls of
economic populism. 
    Conservative Keiko Fujimori will face off with investor
darling Pedro Pablo Kuczynski, which should yield few surprises
in terms of economic policy. 
    "(The runoff) is widely regarded as the market's preferred
outcome, with both candidates pledging to maintain pro-business
policies, unlike Mendoza, whose populist rhetoric and recent
surge in the polls had generated market anxiety," J.P. Morgan
economist Franco Uccelli wrote in a client note.
    U.S.-traded shares of Credicorp, Peru's biggest
financial holding company, shot up 10.6 percent, its biggest
one-day advance in almost ten years.
    Precious metals miner Buenaventura  rose 6.4
percent after jumping by as much as 12.4 percent earlier in the
day to a new nine-year high.
    Meanwhile, the Brazilian real extended a rally for a
second day, hitting an eight-month peak before a congressional
committee was set to vote on President Dilma Rousseff's
impeachment after markets close. 
    A majority decision for the leftist president's ouster would
pave the way for a vote on the House floor as soon as this week.
    Local media polls have generally shown increasing lawmaker
support for impeachment, boosting the country's stocks and
currency. Many traders believe a change in government would lay
the groundwork for an investment recovery in the recession-mired
    "This week carries a promise of high stakes," said Ricardo
Gomes da Silva, a trader at the Correparti brokerage. 
    Stocks whose performances have been tied to political
developments rose but shares of export-oriented companies such
as planemaker Embraer and meatpacker JBS SA
 fell on the back of a stronger local currency.
    BM&FBovespa SA retreated 1.2 percent after it
agreed to buy rival Cetip SA Mercados Organizados,
creating Latin America's largest bourse with a market value of
almost 12 billion reais ($3.4 billion).
    Deutsche Bank Securities analyst Tito Labarta lowered his
recommendation on BM&FBovespa shares to "hold," saying the
stock's recent rally limited the space for gains. 
    Key Latin American stock indexes and currencies at 1910:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets               825.75     1.09     2.86
 MSCI LatAm                         2150.37     2.42    14.74
 Brazil Bovespa                    50379.04     0.17    16.21
 Mexico IPC                        44881.63     0.05     4.43
 Chile IPSA                         3928.52     0.04     6.75
 Chile IGPA                        19261.51     0.03     6.12
 Argentina MerVal                  12252.02     0.24     4.94
 Colombia IGBC                      9866.08     0.65    15.43
 Venezuela IBC                     15196.07    -0.04     4.17
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.5015     2.67    12.72
 Mexico peso                        17.6220     0.90    -2.22
 Chile peso                           679.5     0.49     4.44
 Colombia peso                       3053.4     1.34     3.80
 Peru sol                              3.28     2.69     4.09
 Argentina peso (interbank)         14.5200    -0.21   -10.59
 Argentina peso (parallel)            14.91     0.00    -4.29
 (Additional reporting by Paula Arend Laier; Editing by Daniel
Flynn, Meredith Mazzilli and Jeffrey Benkoe)
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