Peru: Humala's Presidential Victory Triggers Sharp (But Brief) Stock Market Slide
Former army officer Ollanta Humala squeezed past Keiko Fujimori in last Sunday’s presidential runoff in Peru. His biggest challenge may be yet to come: aiding the country’s rural poor while at the same time placating jittery investors.
EYES INSIDE -- LATIN AMERICA
Just hours after Nationalist Party leader Ollanta Humala won the Peruvian presidential election by a slight margin in a hotly contested June 5 runoff, concerns were raised over what economic and social directions Peru will be taking over the next five years.
On Monday, the day after Humala defeated conservative congresswoman Keiko Fujimori, the Peruvian stock market plummeted 12.5% – a record drop in recent years – over worries that the 48-year-old former army officer may impose new tax rules for the nation's mining industry. Mining accounts for more than half of the country's exports and has been fueling the surging economy over the past seven years.
On Tuesday, stocks bounced back after Humala called for calm. The left leaning president-elect has pledged to distribute the country's wealth evenly among Peru's poorer residents. Be he also promises to bring in the best technocrats and economists to help him keep the country's finances flourishing.
Peru has experienced rapid growth over the past 10 years, fueled mainly by investments in the mining sector. According to Deutsche Bank, about 16% of the world's silver is mined in Peru, which also accounts for 12% of global zinc production, 9% of all gold mining and 7% of the world's copper production. A huge cash cow, mining has caused deep social rifts among residents in rural areas, who accuse international firms of reaping huge profits and giving them little in return.
Opponents of the president-elect worry that Humala, once a strong ally of fiery Venezuelan President Hugo Chávez, could govern with vengeance and take aim at his critics, including members of the press, who throughout the campaign accused him of having a hidden agenda, Peru's El Comercio reports.
The 36-year-old Fujimori, who lost the runoff by less than 500,000 votes, said it was best that the "violence and attacks that occurred during the race" remain in the past. Humala, who edged out Fujimori by a margin of 51.4% to 48.5%, said in an interview with CNN that he won't seek any type of revenge against the press.
Humala will begin a South American tour Thursday with stops in Brazil, Uruguay, Argentina and Chile. His inauguration is scheduled for July 28.