Peru's stock market, monthly performances, 2011

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Nuff said.

The Lima IGBVL 'General' stock market index

Hey, you know those really annoying relatives, typically an uncle or an aunt or a cousin you don't see that often, that tell you something about their take on the markets even though they don't have the first freakin' clue about the underlying causes or the merest inkling of how money flows, then when their call comes to pass give it "Told you so...told you so didn't I?", either for weeks on end on the phone or in mails, or every single Christmas time?

Well....told you so, didn't I?

Chart of the day is....

...the Peru Stock Exchange IGBVL "General" index, 12 months to date:

On Friday it closed at 21,227.68 We'll see where it stands tomorrow morning, too. Place your bets, ladies and gentlemen...

IGBVL

It's a little difficult to worry about the Northern markets when there's this yummy looking sandpit in which your author can go play today:

The Peru IGBVL index dumped seriously yesterday but then recovered and finished up on the day, from bottom to top a 6.8% turnaround....nothing shabby for an index. We've also had all the right soothing noises out of the Economy Ministry and a Central Bank that sold dollars for the first time in two years (U$91m), giving out a strong signal to the forex jocks that the Peruvian Nuevo Sol (PEN) wasn't going to go all Chilean Peso on us in the near future.

The rebound set up nicely for today, now just waiting nine minutes for the open. Have fun up your end of The Americas, dudes.

UPDATE: The IGBVL is 2.58% up in the first hour....a good start. Link here

UPDATE 2: Midday strikes and the IGBVL is up 4.7%. I hope you're having as much fun as we are down this way. Pip pip!

South America vs S&P500, 2011

This could turn into a weekly obsessive chart at IKN during 2011 (that's fair warning):

The S&P500 is basically UNCH as goes 2011 so far. The Bovespa is down about 2.5%, Chile's IPSA is down about 3%, Peru's IGBVL is not having a good start to the year.

Argentina versus Peru

Conventional wisdom on Peru: New miracle economy.....stable.....top performing....great growth......new best friend......can't be bettered......expanding local market

Peru's benchmark IGBVL index is up 215% from the Financial Crisis lows.

Conventional wisdom on Argentina: Risky.....volatile.....default at any moment....don't wanna invest there....never make any money there....avoid the local market

Argentina's benchmark Merval index is up over 240% from the Financial Crisis lows.

Never forget that most advice you receive on LatAm finances is laden out by complete dumbasses.

Peru's stock market is telling us that....

....this bull isn't stopping.

You into TA? Well, if so then you'll take a look at this and say "going to new highs", which means 25% to run. All aboard!

Peru's IGBVL rally

click to enlarge

We keep an eye on the Peru IGBVL 'General' index because it's a nice way of checking on mining stocks and EM trends at the same time. We've had a rally in recent weeks that now sees the IGBVL at the top of its (roughly speaking) 14,000 to 16,000 channel which has remained on track for more than a year. Will this time be different? YOU BE THE JUDGE!

A key mining chart at an important support

We've featured Peru's IGBVL "General" index on several occasions both here and in the subscriber Weekly because of the heavy weighting it holds towards mining and mining service companies. Here's what it looks like today:

The optimistic amongst you can look at right now as a place to find a rebound. The pessimists will see real pain in the pipeline as the IGBVL breaks down through 14,000 and drops real lows. Take yer pick, chartlovers.

We've been watching the Peru stock market index.....

....over at The IKN Weekly for the past month, as it's one of the better tells around to combine the mining industry with the state of emerging markets. Here's the up-to-date 12 month chart......

.....and here's the spiel that came with our first coverage of Peru's IGBVL "general" index back in IKN49 (dated April 11th); since then the theory offered has basically worked out. Enjoy.

Shock! IKN does technical analysis!
I’m no TA-head and never will be. I don’t “trade off signals” or anything else because my investment decisions are firmly based on fundy analysis. However even a chart-knucklehead such as myself watches a few charts; one watched carefully is the gold/silver ratio. Another is Dr. Copper. And today here’s another one that gets followed by this author, the Peru IGBVL index.

The Peru Stock Exchange is one I watch to gauge overall metals market sentiment. With the general good feeling enjoyed by metals such as copper and gold recently, it’s not going to come as much surprise to find that the Lima Stock Exchange General Index, with around 60% of its weighting made up by miners or mining-exposed companies (eg mine services companies), has been rallying nicely these past few weeks from a February low of under 14,000 to today’s (i.e. April 11th) 15,733 (less than 200 points off its 52 week high). The chart here shows the five year longview to give a little more perspective (NOTE to blog May 5th readers: 5 year chart without notes added below this text), but we can see over on the right of the chart that this rally is now pushing on the ceiling of a trading range in place ever since the metals slump of 3q08 rebounded in the middle of 2009.

The RSI is also featured in the chart, with four litle red circles noting the recent overbought spikes. One of those is in place right now of course, with the inference that the recent rally may be at an end. On the other hand, the 2006 and early 2007 period shows quite clearly that in a strongly bullish situation, the index can remain technically overbought for a long period. The reason for showing the IGBVL index today is that, according to this little indicator that has served me quite well on a macro scale, we’re reaching a minor crunch moment for metals and miners. If I see the IGBVL breaking through 16,000 successfully with panache, strength and charm, there’s every reason to expect it to run further. However the threat of a reversal at current levels is also clear and it would surprise no-one to see a mini-slump back to that 14,000 baseline.

As master charter Gary BiiWii would say, it’s all about managing risk. The last time the index reached the 14,000 level I had my eye on this squiggly line and looked for it to reverse, which is what it did (after dipping into the 13k level for a couple of days....I’m not TA-loving enough to worry about the smallstuff and trade the technicals anyway). When the IGBVL moved up and through 15k it was only of passing interest to me, as there was no “crunch point” likely. But now 16,000 is on the horizon, I’m back looking at the performance of the Peruvian Stock exchange carefully. There’s nothing here that’s cause for worry, but there is decent reason to look for a possible downturn. As far as this chart-sceptic is concerned the reasons are not compelling, but definitely more than a couple of weeks ago.

click to enlarge

What Peru's IGBVL may be showing

This below comes from the intro section of yesterday's IKN Weekly. On a day when just pointing a stick at a junior mining makes it shoot higher on volume, a little caution might be a good thing to read about. There are several signals out there pointing to "possible reversal", with the one featured yesterday just a single example. This is not IKN calling a top, this is IKN saying that it pays to be wiser than the To Da Moon Alice club and consider what's going on in context.

Shock! IKN does technical analysis!

I’m no TA-head and never will be. I don’t “trade off signals” or anything else because my investment decisions are firmly based on fundy analysis. However even a chart-knucklehead such as myself watches a few charts; one watched carefully is the gold/silver ratio. Another is Dr. Copper. And today here’s another one that gets followed by this author, the Peru IGBVL index.

The Peru Stock Exchange is one I watch to gauge overall metals market sentiment. With the general good feeling enjoyed by metals such as copper and gold recently, it’s not going to come as much surprise to find that the Lima Stock Exchange General Index, with around 60% of its weighting made up by miners or mining-exposed companies (eg mine services companies), has been rallying nicely these past few weeks from a February low of under 14,000 to today’s 15,733 (less than 200 points off its 52 week high). The chart here shows the five year longview to give a little more perspective, but we can see over on the right of the chart that this rally is now pushing on the ceiling of a trading range in place ever since the metals slump of 3q08 rebounded in the middle of 2009.

The RSI is also featured in the chart, with four litle red circles noting the recent overbought spikes. One of those is in place right now of course, with the inference that the recent rally may be at an end. On the other hand, the 2006 and early 2007 period shows quite clearly that in a strongly bullish situation, the index can remain technically overbought for a long period.

The reason for showing the IGBVL index today is that, according to this little indicator that has served me quite well on a macro scale, we’re reaching a minor crunch moment for metals and miners. If I see the IGBVL breaking through 16,000 successfully with panache, strength and charm, there’s every reason to expect it to run further. However the threat of a reversal at current levels is also clear and it would surprise no-one to see a mini-slump back to that 14,000 baseline.

As master charter Gary BiiWii would say, it’s all about managing risk. The last time the index reached the 14,000 level I had my eye on this squiggly line and looked for it to reverse, which is what it did (after dipping into the 13k level for a couple of days....I’m not TA-loving enough to worry about the smallstuff and trade the technicals anyway). When the IGBVL moved up and through 15k it was only of passing interest to me, as there was no “crunch point” likely. But now 16,000 is on the horizon, I’m back looking at the performance of the Peruvian Stock exchange carefully. There’s nothing here that’s cause for worry, but there is decent reason to look for a possible downturn. As far as this chart-sceptic is concerned the reasons are not compelling, but definitely more than a couple of weeks ago.

Peru's stock market update

Here's a chart of the Lima Stock Market main General (IGBVL) index year to date as it compares with the S&P500.

The mining heavy IGBVL shot off to a great start in the first two weeks of Jan'10, but since then it's been downhill. Risk aversion to EM exposure it what it looks like from this angle, with the gap between the IGBVL and the SPX closing all the time.

Meanwhile, on a longer view of the two indices that runs for two years and takes in the early 2008 peak, then the crisis trough, the 2009 recovery and the fist two months of this year.....
......the performance of the IGBVL has been remarkably similar to that of the SPX. Now all we need to work out is why and what it means (sorry, I'm too dumb for that).

Peru's Stock Market Index, the IGBVL

Here's a 12 month chart of the IGBVL "general" index from the Peru stock exchange (BVL).

Being chock full o' mining companies (43.6% direct miners) and related industries (steelworks, hydrocarbons, mining services), plus banks that invest in mining companiesm steelworks, hydrocarbons, mining services etc, means that Peru's IGBVL rises and falls in line with the fate of the commodities indices (here's the full list of participants and their weightings in the index)

Company	Ticker	Weighting
Volcan "B"	VOLCABC1	9.04%
Maple Energy	MPLE	7.46%
ADR Buenaventura	BVN	6.39%
Southern	PCU	4.97%
La Cima Inv.	LACIMAI1	4.23%
Credicorp	BAP	4.18%
Austral Group	AUSTRAC1	3.85%
Atacocha "B"	ATACOBC1	3.70%
Cerro Verde	CVERDEC1	3.56%
Milpo	MILPOC1	3.54%
Relapasa	RELAPAC1	3.45%
Agro Ind Pomalca	POMALCC1	3.22%
Minera IRL	MIRL	3.03%
Minsur Inv.	MINSURI1	2.98%
La Cima	LACIMAC1	2.89%
Graña y Montero	GRAMONC1	2.87%
SIDERPERU	SIDERC1	2.84%
Aceros Arequipa	CORAREI1	2.56%
Intergr Financ Serv.	IFS	2.45%
Casagrande	CASAGRC1	2.45%
Bco Continental	CONTINC1	2.24%
Candente	DNT	2.00%
Morocha Inv.	MOROCOI1	1.99%
El Brocal	BROCALC1	1.93%
Alicorp	ALICORC1	1.86%
Ferreyros	FERREYC1	1.79%
EDEGEL	EDEGELC1	1.68%
Scotiabank	SCOTIAC1	1.50%
Cementos Pacasmayo	CPACASC1	1.40%
Telefónica "B"	TELEFBC1	1.40%
Luz del Sur	LUSURC1	1.34%
Cementos Lima	CEMLIMC1	1.20%

So with the IGBVL now back below where it started 2010 and also at what seems like a resistance level, it might be a good time to buy......or then again, it might be a good time to get the hell outta Dodge. You be the judge.

Charts of the day are.......

The 30 chart chart for the Lima IGBVL index and the 30 day chart for spot copper.

Go on, tell me you think it's a coincidence. Go on.......dare you....go on.....

UPDATE: Check out Monty High's blog for a look on the latest developments in LME copper inventories and his call on the short term future of the metal.

Bagua: Is money talking too?

Maybe this is what tipped the balance in Twobreakfasts' head and got him to mea culpa last night.

Or am I being way cynical here?

Charts of the day are.......

.....the Peru IGBVL 'General' headline index.

This first one is the one making all the feelgood headlines of "up 50% in 2009" and "world's best performing stock market" and stuff of similar ilk.

Well, it may be a top world performer in 2009 but I hope you haven't been buying and holding it for the last couple of years. Here's the same index as from January 2007....

...and if it kinda reminds you of the movements in copper....

......file that thought under 'not a coincidence'. Whatever Twobreakfasts might want you to believe, Peru's economic growth is based on luck and external demand for its metals, not some miracle of management.