Scalper1 News
By Jonathan Jones and Tom Lydon After several years of disappointing performances, Latin American equities are rebounding this year. While Brazil, the region’s largest economy, commands most of the attention, investors should sleep on Peru and the iShares MSCI All Peru Capped ETF (NYSEArca: EPU ) . Buoyed by higher commodities prices, EPU, the lone exchange-traded fund devoted to Peruvian stocks, is up 22% year to date, according to industry analyst ETF Trends . EPU is reflective of Peru’s status as a major miner of gold, silver and copper. The ETF devotes 46.4% of its weight to the materials sector and another 30.1% to financial services stocks. No other sector commands more than 8.8% of the ETF’s weight. Economic data is supportive of a bullish outlook on EPU and Peruvian stocks. “The latest data showed mining output slowed to 7.8% year over year, from a record high of 22.4% year over year in December, and construction, manufacturing and retail contracted by 2.7%, 3.9% and 2.6% year over year, respectively,” reports Dimitra DeFotis for Barron’s , citing Capital Economics data. EPU has come a long way from struggling amid lower gold and silver prices (Peru is a major producer of both metals) and wondering about Peru’s market classification. Index provider MSCI had previously warned that Peru was in danger of losing its emerging markets status and being demoted to the frontier markets designation. However, earlier this month, MSCI confirmed it is keeping Peru in the emerging markets group. The index provider did say that risks remain to Peru’s retention of emerging markets status. “MSCI warned earlier in mid-August that Peru could be downgraded to frontier market status as only three securities from the country had met the size and liquidity requirements for emerging market status,” according to Emerging Equity. “We still expect GDP growth to accelerate to around 3.7% in 2016, from 3.2% in 2015… it is too soon to worry about a renewed slowdown in growth in the first quarter of 2016. … Mining output is likely to rise further in 2016 as a number of copper mines expand production. What’s more, government spending is set to remain supportive as planned infrastructure projects continue to be implemented. We doubt the upcoming presidential election in April will change the outlook much, either, as all the leading candidates appear to be committed to continuing with the current government’s fairly orthodox economic policy,” said Capital Economics in a note posted by Barron’s. iShares MSCI All Peru Capped ETF Click to enlarge Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. Scalper1 News
Scalper1 News