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Are Peruvian stocks primed for a breakout?

Sep 26, 2018

  • iShares MSCI All Peru Capped Index Fund (EPU), the ETF that tracks Peruvian stocks, has generated YTD returns of –9.44%. 
  • EPU’s RSI is neutral indicating the ETF is neither overbought or oversold, although EPU recently recovered from a very low RSI earlier this month indicating the ETF was oversold. 
  • EPU’s bull run leading up to the beginning of 2018 can be attributed to consistent GDP growth of 3%+ from the beginning of CY2016 through the end of CY2017 (with the exception of 1Q2017, where EPU experienced a sell-off ).  
  • Peru’s spike in GDP growth in 4Q2015 helped drive the beginning of EPU’s bull run, as both of these events occurred around roughly the same time. 
  • Peru’s GDP growth came in at roughly +2% for 2Q2018. If Peru can see GDP growth return back to 3%+, EPU may be poised for a breakout. 


 

Peru - Real GDP Growth 2013-2018

Source: Bloomberg