Wednesday, June 8, 2011

Lima Stock Exchange suffered the largest fall in its history after the election of Humala

The Lima Stock Exchange plunged 12.51% on Monday, weighed down by mining stocks, amid fears following the presidential victory of nationalist Ollanta Humala, traders said. At 11.06 local time, the overall index  IGRA was down 10.93%, to 18,908.20 units. The index comprises the leading titles ISEL tumbled 12.53%, to 25664.97 points.

These results represent the largest stock market drop in history. The Peruvian stock market resumed trading after a suspension of two hours. She was suspended a few minutes after the opening after falling 8.71%. In anticipation that the market continue to fall, the Stock Exchange decided to suspend trading until 10:00 (15:00 GMT) as a precaution.

Hernando Pastor, of the brokerage SAB Kallpa Securities, said investors living "moments of panic" and the market just waiting to be given clear signals that the country will continue with the current economic model. The sectors hardest hit by the sharp sell-off were the mining exploration stage (-20.58%), industrial (-10.92%) and miscellaneous (-6.50%).

In the market there were only 48 operations totaling a turnover of 590,715 soles, equivalent to $ 213,795. The fall of the square of Lima was the steepest since October 2008, when global markets were hit hard by a financial crisis. JPMorgan is advising investors to look for opportunities to buy Peruvian debt, following a wave of selling after the electoral victory of left-nationalist Ollanta Humala.

"I think probably there will be more positive surprises than negative at this point. Frankly would look for opportunities to increase exposure. I think the market probably overreacted a bit," said Joyce Chang, JP Morgan, Summit Investment Outlook for 2011 Reuters.

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