Peru, from John Floyd

May 30, 2007 |

 It is notable that today the largest equity index decliner is not China but Peru, which at the moment is down 9.44%. The index is weighted heavily toward commodity shares, particularly industrial commodities.

A large part of today's move is generated by one particular stock, SMCV PE. Nonetheless, I think these sorts of developments should be watched as having potential implications for other similar and correlated markets. Specifically, does this say anything about what has been a seemingly endless demand for commodity-related assets, stocks, currencies, physicals, etc.? What implications might this have for particular countries, both pro and con, that both export and import these products, such as Australia, Chile, and South Africa, etc?

From Luca Coloso:

The Peruvian index has done +168% last year and today's fall included +41%. This is catching the attention of the locals who are speculating mindlessly. My wife is Peruvian and was telling me that one of her aunts, who has never invested in the stock market before, just last week was recommending strongly to her daughter to get a loan from the bank and invest in the market.

I don't think this needs further comment apart from the public's need to lose more than necessary, the system's upkeep, and the perils of a heavily "commoditized" market. 


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