Take A Shot At The Peruvian Miners (EPU, BVN, SCCO)
Now that markets have reacted to Ollanta Humala’s election as president of Peru, it might be time for the brave to dip back into the country’s battered miners.
Humala’s economic advisor has made the unusual move of reassuring investors that the incoming government will “respect” existing tax contracts with mining companies.
The news has come as a profound relief for those who feared that the left-wing Humala would take a page from Hugo Chavez’ playbook and tax Peruvian miners into oblivion — or even nationalize their assets outright.
However, while the new administration is not looking for any “handouts” from resource companies, added surcharges on copper and gold prices may be in store.
At the moment, these “windfall” taxes may only end up in line with what other countries currently collect from their mining industries.
In the meantime, go ahead and take a shot at the Peruvian miners here. Peru is a global giant where copper production is concerned and Southern Copper (NYSE:SCCO) and Buenaventura (NYSE:BVN) are the easiest ways for U.S. investors to play.
And the broad Peruvian ETF (NYSE:EPU) has already regained half of its dramatic 14% post-election losses:
Between them, BVN and SCCO account for 30% of EPU’s holdings.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.