Mexican president arrives in Lima on state visit

Mexican President Felipe Calderon arrived in Lima this afternoon at Grupo Aereo Nº 8 air base and began his two-day state visit, during which he will meet with his Peruvian counterpart Alan Garcia and attend the Lima Summit on Deep Integration along with the leaders of Chile and Colombia.

Calderon landed in the country at around 14:00 hours and is now on his way to the Government Palace, where he will be welcomed with full military honors.

At 16.00, the Mexican leader will hold talks with Peruvian President Alan Garcia and then witness the signing of bilateral agreements. Both heads of state will offer a joint press conference at 17.00 local time.

An hour later, Calderon will take part in a ceremony marking the 123rd anniversary of the Lima Chamber of Commerce in Jesus Maria. Afterwards, he will return to the presidential palace at 20.30 hours to participate in a dinner hosted in his honor by President Garcia.

On Thursday, Felipe Calderon will visit the Peruvian Congress at 09.50 hours to meet with its President Cesar Zumaeta and other Congress members.

An hour later, Calderon will visit the Municipality of Lima where he will receive the keys of the city from Mayor Susana Villaran. At noon, he is scheduled to visit the Justice Palace to meet with Supreme Court President Cesar San Martin.

In the afternoon, he will participate in the Lima Summit on Deep Integration along with his counterparts from Chile, Sebastian Piñera, and Colombia, Juan Manuel Santos. (Andina)

Titicaca: The World's Highest Large Lake

Lake Titicaca, at an elevation of 12,507 feet (3,812 meters) in the Andean Altiplano, is the highest large lake in the world. More than 120 miles long and 50 miles wide, it was the center of the Incan civilization, and today straddles the boundary between Peru and Bolivia.

Perhaps more importantly, Lake Titicaca contains one of South America’s longest climate records, extending back more than 25,000 years, according to a NASA statement. Scientists have studied indicators of the water level changes over time in Lake Titicaca to tease out information about precipitation shifts in the high Andes and the South American tropics.

Because the lake occupies the low point of the Altiplano, much of the water of the high plateau eventually trickles into the lake. And because it is surrounded by mountains, very little of Lake Titicaca’s water drains out—the Rio Desguadero is the only major outflow river. So, like a bathtub with no drain, this large and deep lake (with depths of several hundred feet) has become the collecting basin for more than 25,000 years of sediment. These sediments and their fossils contain clues about past climate conditions.

The restricted outflow of the lake creates conditions where even shorter, interannual climate cycles (like El Niño /Southern Oscillation) impact Lake Titicaca’s water levels. Recent lake level variations have been several meters, with low levels occurring during regional droughts of El Niños.

Right now, the region is relatively wet. In this image, the dark greens of the wetlands along the shallower margins of the lake contrast strongly with the surrounding desert, while large cities like Puno, Peru (100,000 people), are difficult to discern from the surrounding countryside.

Ouramazingplanet

Peru Stocks, Currency Decline as Ex-Rebel Humala Leads Presidential Poll

Peruvian stocks and the currency fell, and the country’s relative borrowing costs climbed to the highest since July, after former Peruvian military rebel Ollanta Humala opened a six-point lead in a presidential poll before a June 5 runoff vote.

The Lima General Index of stocks declined 2.8 percent to 18,268.17 at 12 p.m. New York time. The gauge has dropped 15 percent in the past month, the biggest slide among 90 primary indexes tracked by Bloomberg.

Humala, who won the first round of elections this month, had the support of 42 percent of those polled by Lima-based researcher Ipsos Apoyo, compared with 36 percent for Congresswoman Keiko Fujimori. Falling Peruvian asset prices reflect investors’ fear of Humala’s proposals, including higher mining royalties and increased state control of the country’s gas reserves, and concern he will strengthen ties with Venezuelan President Hugo Chavez, said Cesar Perez-Novoa, managing director of Santiago-based brokerage Celfin Capital.

“All this adds up to less investment and a hindrance for the economy,” Perez-Novoa said. “Given the country’s strong growth, its potential and Peru’s position in the international market, there is more at stake in these elections than ever.”

Peruvian Finance Minister Ismael Benavides said last week that Humala’s economic policy plans, which include renegotiating contracts with foreign companies and trading partners including the U.S., are unsettling investors. 

The $153 billion economy will slow, beginning this month, as companies postpone investment until after the vote, Benavides said.

Sol Decline

The Peruvian sol fell 0.1 percent to 2.8220 per U.S. dollar. The yield on the nation’s benchmark 7.84 percent sol- denominated bond rose to its highest in more than two years, adding 1 basis point, or 0.01 percentage point, to 7.26 percent, according to prices compiled by Bloomberg.

The extra yield investors demand to hold Peruvian dollar bonds instead of U.S. Treasuries rose 3 basis points to 207, the most since July, according to JPMorgan Chase & Co.

The sol has declined 1.2 percent in the past month, the worst performance among 31 major currencies tracked by Bloomberg, on concern Humala’s pledges to boost state control of the fastest-growing major Latin American economy of the last five years will lead investors to pare investment projects valued at as much as $50 billion.

Peru is the world’s second-largest miner of copper, No. 6 in gold and the world’s largest silver producer. Minerals account for about two-thirds of the Andean country’s exports.

Lima Favors Fujimori

“The fact that Humala is in the lead by six percentage points is negative as far as foreign investors are concerned,” Joe Kogan, head of emerging markets strategy at Scotia Capital Markets Inc., said in a telephone interview from New York. “It’s getting harder and harder to say he can’t win. In the long term, investment in the mining industry would probably suffer quite a bit with Humala.”

According to the Ipsos Apoyo poll, Humala had 44 percent support outside of the Lima metropolitan area, compared with Fujimori’s 33 percent. Within Lima’s city limits, Fujimori, 35, the daughter of jailed former president Alberto Fujimori, had 43 percent support, compared with 35 percent for Humala, Ipsos Apoyo said. Lima accounts for about a third of the Peruvian electorate.

Ipsos Apoyo said 22 percent of those surveyed are either undecided or would cast a blank vote. The researcher said 35 percent of those surveyed said they would never vote for Humala, compared with 38 percent for Fujimori.

The researcher contacted 1,802 people in 23 of Peru’s 25 regions from April 16 to 21. The margin of error was 2.3 percentage points.

Outside Financing

Almost half of those surveyed say Chavez is financing Humala’s campaign and that, if elected, the former army official would ally himself with the Venezuelan leader and Bolivian President Evo Morales, according to the poll, which was published yesterday in El Comercio newspaper.

Humala, 48, has said he hasn’t received any outside financing for his presidential campaign.

Almost two-thirds of those surveyed are in favor of Humala’s proposal to change or replace the 1993 constitution introduced after Alberto Fujimori dissolved Congress and the courts in April 1992, the poll shows.

Humala in 2000 commanded 50 soldiers who seized and occupied one of Phoenix-based Southern Copper Corp.’s Peruvian mines for a week to protest corruption in Fujimori’s government.

Ipsos Apoyo said 68 percent of those surveyed predict that, if elected, Fujimori would free her father, who is serving a 25- year sentence for directing a paramilitary death squad.

Fujimori said last week she won’t pardon her father, after saying in 2008 she wouldn’t hesitate to free him if she became president.

Humala won 32 percent of balloting in the April 10 first- round vote, falling short of the 50 percent needed to avoid a runoff. The U.S.-educated Fujimori won 24 percent of the vote.

John Quigley- Bloomberg

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Mining investment in Peru rose 41% to US$646.97 million in Jan-Feb

Mining investments in Peru totaled 646.97 million dollars during the first two months of 2011, an increase of 41 percent compared to the same period in 2010 when it reached 458.59 million dollars, the Ministry of Energy and Mines (MEM) reported Tuesday.

According to the report published by MEM, 19 percent of the investments, or 125.74 million dollars, was destined to mining exploitation or production activities.

The top investing companies in these activities are Xstrata Tintaya and Buanaventura with 49 million and 24 million respectively.

Other important fields which obtained investments are exploration (110.9 million dollars), infrastructure (108.52 million) and preparation (106.94 million dollars).

Cusco attracted investments for 131.91 million dollars (20.39 percent of the total) during the first two months of 2011.

Meanwhile, Cajamarca attracted investments for 104.79 million dollars (16.20 percent), followed by Ancash with 82.17 million (12.70 percent), Junin with 70.14 million (10.84 percent) and Arequipa with 50.3 million (7.78 percent). (Andina)

Today in Peru

Peru generates US$ 10.6 billion in tourism

Peru’s tourism sector generates 30 billion soles (US$10.6 billion) yearly, reported Monday the head of Peru’s National Tourism Chamber (Canatur), Carlos Canales.

“Tourist activity generates more than 30 billion soles, considering receptive and internal tourism, as well as gastronomy, and sports. These numbers would increase even more taking into account the informal sector, which would add 50 percent more,” stated Canales.

He explained that the Central Reserve Bank (CRB) reported in 2007 that tourist activity represented 3.3 percent of Gross Domestic Product (GDP); however, after four years of sustainable growth the tourism sector represents 6 or 7 percent of the GDP.

Canales said that internal tourism has grown significantly over the last few years, and in 2011 this sector would expand at least 15 percent, even though our country is going through an electoral process.

He went on to add that 12 million Peruvians travel as tourists every year, mainly on holidays, and their average expenditure amounts to 350 or 370 soles.

The average expenditure of foreign tourists would reach US$ 1,100. (Andina)

Today in Peru

Rally Dakar 2012 officially announced in Lima

The Rally Dakar off-road 2012, which includes Peru as host of the four final stages and closing ceremony on January 15, was officially announced Tuesday at press conference.

For its 4th South American edition, the Dakar's route has welcomed Peru as part of this world-renowned race, which will showcase the image of the country in front of the world.

“With Peru will discover new atractions, that’s why we decided to choose Lima as a host,” Director of the Dakar rally Etienne Lavigne said.

Riders, drivers and co-pilots will be tackling a route that measures 1,300 kilometres. They will come through Tacna, pass through Arequipa, Moquegua, Ica and Lima, where the award ceremony will take place.

Enhancing the relations with the continent, this year the rally will discover Peru, giving the adventure a pan-American feel.

The Dakar Rally is an annual rally raid type of off-road automobile race. Most of the competitive special sections are off-road, crossing dunes, mud, camel grass and rocks, among others. (Andina)

Peru’s Stocks, Bonds Fall as Humala Faces Fujimori in Runoff

Peru stocks and dollar-denominated bonds fell as the race to be the next president narrowed to Ollanta Humala, a supporter of greater state control over the economy, and Congresswoman Keiko Fujimori, the daughter of a former leader imprisoned for human-rights abuses.

Humala, who once led an army uprising and was an ally of Venezuela’s Hugo Chavez, won 29.3 percent of yesterday’s first- round vote, after 72 percent of ballots were counted as of 10:39 a.m. New York time today. Fujimori, daughter of former president Alberto Fujimori, finished second with 22.9 percent.

The benchmark Lima General stock index fell 0.8 percent, exceeding a drop of 0.5 percent for the MSCI Emerging Markets Index. Peru’s dollar bonds due in 2025 dropped, sending yields up 3 basis points to 5.43 percent, according to data compiled by Bloomberg. The sol sank 0.1 percent to 2.8005 per dollar.

“It’s difficult to get away from the thought that Humala is more left-winged than anyone else in the election,” Jeremy Brewin, who helps oversee about $3 billion of emerging-market assets at Aviva in London, said in a telephone interview. “He perhaps leans more towards re-negotiating the things that we got used to. I am sure we are not the only people who are structurally underweight Peru.”

While a Fujimori presidency may revive the trauma of her father’s decade-long rule, the losing candidates are likely to rally behind before the June 5 runoff vote her to prevent Humala from jeopardizing the fastest economic growth in Latin America over the past five years, said Michael Shifter, president of the Inter-American Dialogue.

Past Election

“She’s not a real recipe for stability, but given the choice, there will be more resistance from the business community to Humala,” said Shifter, who hosted Humala at an event in Washington last year.

Humala, 48, won the first round of balloting in 2006 with 31 percent only to lose by five percentage points to President Alan Garcia in a runoff. The Andean nation’s stocks, bonds and currency tumbled over the past month as Humala surged from fourth into first place in opinion polls.

Former Finance Minister Pedro Pablo Kuczynski came in third yesterday with 21.1 percent support, while ex-President Alejandro Toledo won 15.1 percent. .

Both Humala and Fujimori are polarizing figures in Peru, though each has strong support in the Andean highlands where poverty affects 77 percent of the population in some areas.

Military Uprising

Like Chavez, who as a paratrooper led a failed coup, Humala in 2000 led 50 soldiers who seized and occupied for a week one of Phoenix-based Southern Copper Corp.’s mines to protest corruption that beset Fujimori’s government. His brother, Antauro Humala, is serving a 25-year prison sentence for killing four policemen during the takeover of the southern highland town of Andahuaylas in 2005, in an attempt to force Toledo to resign.

While downplaying his ties to Chavez and muting the anti- capitalist rhetoric used in 2006, Humala’s platform proposes raising royalty fees on mining and gas production and drawing up a new constitution. He’s also pledged to renegotiate a free- trade agreement with the U.S. signed by Garcia.

Last night, at a victory rally in Lima, Humala vowed to seek national unity as president, telling supporters that “Peru wants change without shocks to bring about a big redistribution of the country’s wealth.”

Fujimori´s Campaign

Fujimori, 35, surrounded herself by her father’s former aides including running mate Jaime Yoshiyama, who served as his Minister of the Presidency. The jailed Fujimori is credited by supporters with laying the foundations of Peru’s economic boom by slashing inflation from 7,650 percent to 3.5 percent.

He also closed Congress in 1992 and saw his grip on power tumble after his intelligence chief, Vladimiro Montesinos, was caught on videotape in 2000 bribing opposition lawmakers.

In 2009, after returning from exile, Fujimori was convicted and sentenced to 25 years in prison for ordering a paramilitary squad to kill a group of suspected Marxist rebel sympathizers.

Keiko Fujimori, the mother of two, was elected to Congress in 2006 with more votes than any other candidate. She met her American husband, Mark Villanella, while obtaining an MBA at Columbia University in New York.

Last night, she thanked her father and tried to reassure Peruvians there’d be no return to authoritarian rule.

“We must to look the future, not to the past,” she said as supporters chanted “Chino, Chino, Chino,” her father’s popular nickname. “We’re going to work with absolute respect for democracy, the rule of law, freedom of expression and the press.”

Market Jitters

The cost of insuring Peru’s debt against default rose to its highest since 2009 last week on concern a Humala presidency would jeopardize $50 billion of mining, energy and infrastructure investment that the government expects will fuel 6.5 percent growth over the next five years. Peru, the world’s second-largest producer of copper, grew 8.8 percent last year.

Peru’s sol has declined 1.1 percent against the U.S. dollar since March 20, when Humala began gaining in the polls, making it the worst performer among 25 emerging-market currencies tracked by Bloomberg. The Lima General Index has fallen 4.5 percent in dollar terms during the past month, the seventh-worst performance among 90 primary stock indexes tracked by Bloomberg.

“The uncertainty ahead of the runoff will lead to some further selloff of Peruvian assets,” said Kevin Daly, who helps manage $6 billion in emerging market funds at Aberdeen Asset Management Plc in London.

Garcia’s Legacy

Garcia, 61, whose five-year mandate expires July 28, is banned by Peru’s constitution from seeking re-election. During his term, Peru created 2.5 million jobs and had its first-ever investment-grade ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.

Toledo, who had been the early frontrunner, saw support for his candidacy fade since February. Still, he was the only candidate favored to defeat Humala in a runoff scenario, by four percentage points, according to an April 3 poll by Lima-based researcher Ipsos Apoyo. The same poll found Humala and Fujimori tied in a runoff scenario, with 42 percent support each.

Whoever is elected president may face gridlock in Congress. Humala’s Nationalist Party won about 39 of the 130 seats in Peru’s unicameral legislature, compared with 31 for Fujimori’s “2011 Force” and 23 for Toledo’s “Possible Peru” movement, according to exit polls.

Mario Vargas Llosa, the Peruvian novelist who won the 2010 Nobel Prize for literature, said last month that it would be a “catastrophe” if either Humala or Fujimori were elected.

“If the daughter of a dictator who’s serving a jail sentence for being a criminal and a thief has a chance of being president, I’ll be one of the Peruvians that will try to stop her by all legal means,” said Vargas Llosa, who lost the presidency to Fujimori in 1990 and was backing Toledo in this race.

John Quigley and Ye Xie - Bloomberg

To contact the reporters on this story: John Quigley in Lima at jquigley8@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

FTA Mexico Peru: Peru signs tenth FTA, assures 2.7 bln people market

Peruvian President Alan Garcia highlighted that Peru, with the signing of the bilateral Free Trade Agreement with Mexico, has signed its tenth trade agreement which assures a market of 2.7 billion people.

“This is our tenth Free Trade Agreement, and with this one we assure a market of over 2.7 billion people who will open their doors to Peruvian products and vice versa. This flow guarantees the growth and social development of both countries”, said the president.

Peru has signed FTA with the United States, China, Thailand, Korea and Chile among others. While the official text of the Association Agreement with the European Union will be signed on April 13.

President Garcia noted that the FTA with Mexico generates “positive and fundamental consequences” for the Peruvian market as it will allow greater flow between both economies.

The agreement will not only focus on important elements in the financial and service area, but also in cultural topics such as the recognition of qualifications and degrees, which is important to bond both societies. (Andina)

Today in Peru

Miley Cyrus: I'm very excited to go to Peru

Miley Cyrus, the famous actress and teen idol who became known worldwide for her role in the Disney series “Hannah Montana,” will perform for the first time in Peru on Sunday, May 1st.

In an exclusive telephone interview with local radio station RPP, the singer expressed her joy and excitement over her upcoming trip to the South American country.

"I am excited to go to Peru, I have always wanted to visit places I’ve never been, places where I know my fans have asked me for concerts for a long time at South America. I’m really anxious to go because I know that is a very interesting place," said Miley Cyrus.

Similarly, the 18-year-old actress could not contain her excitement when she learned that the Peruvian public is the most warm and happy.

"I've heard from friends who have gone to Peru that they had a lot of fun there, people are very warm and funny. I really want to sing with my Peruvian fans, I want to dance and show the best of my show," she added. (Andina)

Today in Peru

Muelle Norte concession shows Peru has world's confidence

The concession of the Muelle Norte terminal at Peru's Callao port shows that Peru has the world's confidence despite the upcoming presidential elections, Peruvian President Alan Garcia said Saturday.

Before leaving the southeastern Puno region where he handed out 18,388 land titles, the head of state said that the concession is great news for Peru, because it will provide our country with the main port on the Pacific facing Asia.

Speaking to RPP radio, he recalled that the world's two largest port operators, worth tens of billions of dollars, participated in the bidding process.

Peru's private investment promotion agency ProInversión awarded the terminal concession to an APM-led consortium on April 1. The group, which also includes Dutch firm Callao Port Holding and Peru's Central Portuaria, won the concession based on the tariff offered for special port services.

The Peruvian leader said that the Dutch-based port operator will invest at least US$748 million and reduce tariffs, forcing Dubai port operator DP World, which operates the port's Muelle Sur terminal, to reduce their tariffs as well.

President Garcia added that "after this concession which shows the confidence of investors on our country, Peruvians should remain calm and serene because we are on track to consolidate growth, eradicate poverty and progress socially thanks to an increased investment and the presence of Peru in the world. (Andina)

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