With a growing economy and demographics, Peru is a key country for the global mining sector, set to benefit massively from the energy transition. We analyze the 3 most important stock market indexes in Peru.
With more than 30 million people, the size of the Peruvian economy is already relatively large. Furthermore, it has room to grow until it catches up with the most prosperous countries in Latin America.
When it comes to its most important economic sectors, mining is without a doubt at the top of the list. Peru has vast amounts of natural resources, particularly copper, gold, lead, tin and zinc. These exports represent a very significant inflow of foreign currencies that give the Chilean Peso (CLP) stability in the financial markets.
A macroeconomic scenario marked by elevated inflation in raw materials can be very positive for some emerging economies, particularly those with abundant reserves of natural resources, such as Peru.
Additionally, the energy transition in the West and the mass adoption of electric vehicles require vast amounts of metals. Therefore, the Peruvian economy is set to benefit from that trend over the next few decades.
The Lima Stock Exchange concentrates most of the stock trading activity in Peru. It was opened in 1860, making it one of the oldest stock exchanges in South America.
In the following sections, we will analyze the most important stock market indexes for Peru:
S&P Peru General
The S&P Peru General, whose full name is S&P/BVL Peru General Index, is the main stock index of the Lima Stock Exchange. As its name suggests, the index is published by S&P Dow Jones, the same company that calculates the famous S&P 500index for the Unite States.
BVL is simply short for Lima Stock Exchange in Spanish. The index was originally called IGBVL, before it was taken over and renamed by S&P.
The S&P Peru General is composed of the largest and most liquid companies listed on the Lima Stock Exchange. The number of stocks in the index is not fixed, but fluctuates over time depending on how many companies meet the minimum market capitalization criterion.
Within the index, stocks are weighted according to their market capitalization adjusted for free float. Therefore, larger companies tend to dominate the market movements of the index.
It should be noted that, according to the index methodology, no stock can account for more than 25% of the total capitalization of the index. Additionally, if a company gets more than half of its revenue from customers located outside of the country, its maximum weight will be capped at 10%.
The S&P Peru is heavily dominated by commodity producers and the financial sector. Some of the largest companies are Buenaventura Minas, Credicorp and Southern Copper Corp.
Finally, here is the link to the official website of S&P so you can find additional details.
The MSCI Peru is a stock market index calculated by the US company MSCI. In it we find all Peruvian stocks that are part of the MSCI Emerging Markets Index.
Because the number of stocks within the MSCI Peru depends on how many companies meet the eligibility criteria to join the MSCI Emerging Markets index, that number can sometimes be very low.
For example, in early 2023, only 3 companies are part of the MSCI Peru. As a consequence of that, it is a highly concentrated index.
Such situation could change if the country manages to attract enough capital inflows, thereby boosting the market capitalization of its companies and pushing them above the threshold to be included in the index. Perhaps if there is a bull market in commodities.
For those looking for additional details, here is the link to the MSCI website.
To conclude the article, we will also mention the FTSE Peru, a stock market index calculated by the British company FTSE Russell.
Very similar in methodology to the MSCI Peru, the FTSE Peru includes all Peruvian companies that can be found in the FTSE All World Index.
As we just discussed in the previous section, due to the low market capitalization of Peruvian stocks within the global equity markets, the FTSE Peru is a highly concentrated index with only a handful of stocks.
I hope you found this brief analysis on Peru’s most important stock market indexes useful, and encourage you to subscribe to my newsletter:
And if you are interested in learning about stock market indices from other countries, check out the following section:
Funds and ETF