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6/6/11

Goldman Sachs on the Peru election result

As well as calling "buy" on Freeport (FCX) this morning, the Vampire Squid decided to publish this on the Peru election result.

According to the official vote count, with 86.6% of total votes already in, Mr. Humala (Nationalist party) got 51.18% of the valid votes while Mrs. Fujimori (Fuerza 2011) got 48.17%. Mrs. Fujimori is likely to concede the election within the next few hours. Mr. Humala already gave a victory speech in the early morning hours in which he stroked a moderate tone. He said he would lead a government of national unity and that he would preserve the economic growth and the good policies of the current administration. Moreover he pledged to improve redistribution policies and comply with his campaign promises of increasing social spending.

In our view, the fact that Mr. Humala has won the elections with the support from moderate votes and moreover, that his political coalition does not have a majority in Congress, suggests that he would find it very difficult to impose a radical reform agenda early on during his tenure. Last night, his main economic advisors said that investors should have no doubts about the direction of macroeconomic policies in Peru, because Mr. Humala is committed to maintain the independence of the central bank and a disciplined fiscal policy.

In terms of things to look forward to over the next few days, Mr. Humala is likely to begin nominating cabinet members. In particular, he is expected to appoint the Prime Minister and the Minister of Finance. In our view, it is likely that Mr. Humala will appoint independents to these posts in order to reduce uncertainties.

Eduardo Cavallo

IKN back. For what it's worth, your author has heard from more than one source in the polite circles of Lima society that Ollanta Humala wants the current FinMin, Ismael Benavides, to keep the job and stay on as his Economy Meister. Others say that his finance boffin in the election campaign, Kurt Burneo, will get the job. I think he's set for the chair of the CenBank, personally. But WTFDIK? DYODD.