Peru’s Milastone Mining Militants

Former Peruvian army general Humala’s surprise win in the second-round presidential runoff triggered brief investor panic as the Lima exchange’s double digit year to date slide equaled Egypt’s at the bottom of the core universe heap on his calls for a tougher mining regime and greater anti-poverty push to accompany the country’s torrid GDP growth. Through June cross border inflows into bonds and equities were both modestly positive according to fund trackers, aided by enthusiasm over a formal merger with Colombia and Chile in the combined MILA platform. However upon securing victory Humala advisers immediately proposed revamping the arrangement, which they claimed unduly favored the other parties. Officials in Bogota where a first-stage integration was due rejected the charge as the local business and financial community, which heavily voted for his opponent Fujimori, awaited formal cabinet picks for key economic posts that were predicted to be centrists to project transition confidence. The central bank head may remain in place after meeting with incoming administration representatives and signaling no abrupt further tightening moves with steady inflation and currency readings. Stricter oversight on consumer lending is likely with the new government to curb the rapid pace and protect unwary borrowers who blame banks for misrepresenting installment credit procedures. In the minerals sector, royalty and tax treatment may be changed to maintain a fiscal surplus with workers and communities to receive higher project proceeds. During the campaign the refashioned socialist candidate pledged that state control and interference would not drive such departures which would be negotiated with private operators in commercial fashion.

Nonetheless Venezuelan President Chavez was among the first to congratulate his old ally despite traveling to Cuba for emergency surgery. His undisclosed condition was preceded by weeks of walking with a cane for an ailing knee, raising medical doubts about running for another term next year, especially with his popular approval barely at a majority. Inflation tops the region at almost 30 percent, and GDP growth will be in the 2 percent range this year after 2010’s recession as housing and power shortages linger. Humala has hinted once in office his model may be labor activist turned conservative manager Lula in Brazil, which has experienced serial setbacks since his successor Dilma assumed power. Chief of staff Palocci was again forced to resign over suspect influence peddling enrichment after a brief rehabilitation, and bank listings have suffered in an overall 5 percent stock market decline on warning that personal bad loan levels could hit 10 percent of the total soon, as regulators otherwise attempt to curtail hefty credit growth even through the state lending giant BNDES as that carnival season fades into memory.