left -wing presidencyUPDATE 2-Peru assets weaker as left-wing presidency mulled
15:19 EDT Wednesday, April 13, 2011
* Benchmark stock index down more than 6 percent
* Sol weakens to four-month low despite cenbank action (Updates prices, adds details)
LIMA, April 13 (Reuters) - Peru's benchmark stock index slumped 6.17 percent on Wednesday to a near six-month low while the solclosed at its weakest level in four months on market concerns over presidential candidate Ollanta Humala.
Peru's benchmark index <.IGRA> has fallen more than 12 percent since Sunday, when Humala, a left-wing nationalist, won the first-round vote. He will face right-wing candidate Keiko Fujimori in a June 5 run-off and investors are not entirely convinced she will win.
"Keiko Fujimori is a polarizing force in society which creates uncertainty and gives Humala more of a chance," said David Dowsett, senior portfolio manager at Blue Bay Asset Management in London, adding the fund had bought Peruvian credit default swaps.
Humala favors broadly higher taxes on mining companies while Fujimori says she would tax miners' windfall profits. More than half the stocks listed in Lima's exchange are miners, and the index is also susceptible to international metals prices.
The sol closed at 2.8 per dollar, 0.36 weaker than its Friday close even after the central bank placed all 300 million soles ($107 million) of an instrument auctioned in a bid to soak up the demand for dollars.
The central bank intervenes regularly on the local spot market because half of all bank deposits are made in soles and volatility hurts local consumers and businesses. (Reporting by Ursula Scollo in Lima and Sujata Rao-Coverley in London; Editing by Andrew Hay)