Lima Stock Exchange would grow up to 25% in 2022 due to recovery of the economy

The Lima Stock Exchange (BVL) could grow 25% in 2022, 10 percentage points more than projected in December 2021 (10% to 15%), according to estimates by Credicorp Capital

So far this year, the General Index of the capital park has gained 17.36%, supported by “the price of Peruvian shares and the good financial results of the companies,” said Daniel Guzmán, general manager of Credicorp Capital Bolsa, during the online conference on prospects for the BVL in 2022.

“Last year we projected 10% or 15% for the stock market, but now we are already 17% in these two and a half months, and we believe that this year it should rise to 25%”, said the speaker.

In detail, Guzmán specified that the price-to-earnings ratio for 12 months is currently 11.7 times, but it is still 14% below its median for the last three years (around 13.6 times). .

Regarding the results, the financial group specified that these continue to be driven by the economic recovery and high metal prices.

Heading to 25%

Whether or not the stock market rises 25% will depend, in Guzmán’s words, on whether the political noise diminishes.

Thus, it is predicted that the sectors with the best development will be those of consumption, electricity, cement and mining.

The first would be strengthened by the economic recovery, fewer restrictions on mobility and government stimulus programs. The electric sector would take advantage of relatively stable profits and attractive dividends.

Meanwhile, the cement companies would maintain good results due to the high levels of sales. “We expect a normalization of self-construction, while large projects could provide stability in the short term. The execution of public investment has been a concern, so we will continue to monitor the trend,” said Guzmán.

While the mining sector could take advantage of the high prices of industrial metals such as copper, supported by demand for new renewable energy initiatives and a reduced project portfolio

However, the expert warned that the goal could not be met due to factors such as: the relationship between the Executive and Congress, proper management of environmental and social issues, possible proposals for tax or regulatory changes and possible new releases of funds from the AFPs.

Impact of the war in Ukraine

The increase in energy prices has caused raw materials to rise due to the war in Ukraine. The expert stated that this scenario is conducive to the metals that we export, if we seek to relate it to the BVL.

“It helps to maintain metal prices, but we have to see how the increase in oil prices impacts transportation costs,” he commented.