Humala causes market drop

LIMA
Nationalist presidential candidate Ollanta Humala’s strong showing in a nationwide poll shook Peruvian investors Monday.

The Lima Stock Exchange’s broad general index tumbled 3.99 percent Monday, while Peru’s currency, the sol, weakened slightly against the dollar after the Apoyo polling company showed Humala leading Lourdes Flores, a pro-business former congresswoman, 32 percent to 28 percent.

The poll, published Sunday, had a margin of error of 2.2 percentage points, meaning the two candidates remained in a statistical tie. But it also showed the candidates tied for the first time with 50 percent apiece in a hypothetical two-candidate runoff ballot. Apoyo’s last poll showed Flores defeating Humala 54 percent to 46 percent.
The poll surveyed 2,000 people nationwide March 15-17.

The market drop reflected a now-familiar trend that local financial analysts have taken to calling the ``Humala effect’’ each time a poll shows the candidate making gains with his antiestablishment message.

The Lima Stock Exchange dropped 3.83 percent a week ago when an earlier Apoyo poll showed Humala gaining on Flores, but rebounded within a couple of days.

Neither fluctuation was as dramatic as the 6.56 percent stock drop in December, when Humala first surged in the polls, prompting various international investment banks to recommend that investors decrease holdings in some Peruvian companies.

Humala has been vigorously endorsed by Venezuela’s socialist President Hugo Chavez and has promised heavy state intervention in Peru’s free-market economy. He also has worried Washington because he opposes the U.S.-backed eradication of Peru’s coca crop.