NEW YORK (AP) â¿¿ Shares of South American banking company Credicorp Ltd. plummeted Monday over fears of political discord in Peru. Raymond James analyst Federico Rey Marino downgraded the company's shares after a former leftist army officer, Ollanta Humala, narrowly defeated the daughter of disgraced Peruvian ex-President Alberto Fujimori in the presidential election.
THE SPARK: Ollanta Humala, 48, won a closely fought runoff election Sunday against the daughter of the one-time president that undertook a major overhaul of the economic system in Peru, where Credicorp is based. Humala has promised to give Peru's poor a greater share of the country's mineral wealth. He has pledged to honor the free market, but has also said he will put Peruvians first.
Humala told supporters Sunday night he'd work to convert a decade-long economic boom that is the envy of Latin America into "the great motor of the social inclusion Peruvians desire." He says he'll do so by taxing windfall mining profits and exporting less natural gas so Peruvians get it cheaper.
Investors have pledged more than $40 billion over the next decade to develop gold, silver, copper and other mining operations in rich Andean lodes.
THE BIG PICTURE: Investors are uncertain what Humala's surprise victory could mean for Peru's economy and its currency. That could directly affect Credicorp because the company's banking and insurance business is centered on the Peruvian market. The company also does business in Bolivia, and Panama.
Most investors thought Humala's challenger, 36-year-old Keiko Fujimori, would win the election, Marino wrote in a note to clients Monday.
"In our view, Credicorp shares were pricing in Keiko Fujimori's victory, after Fujimori led in the polls during the past four weeks before the election," Marino wrote. "We foresee an increase in the sovereign spread and a volatile foreign exchange rate in the short term, until uncertainties surrounding Humala's economic program dissipate."