Op-Ed: Observations on the Election Results

“The coming years will for sure compound this as the voting tsunami lines the pockets of a few, but salts the wells of families all over Peru.”

By Nicholas Asheshov

Here are some immediate technical observations on the knife-edge victory of Ollanta Humala.

  • Keiko Fujimori’s people fatally misjudged the final two or three weeks of an inordinately long campaign. The polls show well enough that if the election had been in mid-May, Keiko would have been first past the post. Keiko’s kitchen cabinet, led by Jaime Yoshiyama, a first-class minister in her fathers first administration (1990-92), were so self-confident that they refused to broaden out and form a coalition. They thought they could go it alone.As President Garcia told associates: “They’re close, much too close,” — son muy cerrados. Once Keiko had got into the second slot of a two-person contest, she should immediately have formed a governing coalition pulling together the all-over the-shop center-right, led by PPK. In the first-round campaign Keiko had said repeatedly that she would form alliances once into Round Two. She did not do so, and lost the election because of it.
  • No question but that the heavy-metal support of Mario Vargas Llosa and other big names, including Toledo, persuaded the hundreds of thousands of doubters that Ollanta Humala is, after all a decent middle-of-the-road fellow who just wants a better deal for the poor.Over the past two or three weeks the TV and leading newspapers have published accusations and prima facie evidence that Humala should be investigated for witness-tampering on his own human-rights violations, gross breaches of the electoral finance regulations, foreign financing (Venezuela) of his campaign, tax-dodging, and a handful of other breaches of the law – according to the media.Whether or not these are reasonable cases, or just last-minute electoral campaigning by the anti-Humala people, we will now never know. Whatever, these doubts, as presented in the media, made little or no difference. What seemed often like a broadside campaign against Humala had either no impact, or not enough to make a difference.
  • The polls, led by CPI, Datum, Ipsos-Apoyo, seem to have done their best. But in an electorate that includes stone-age Indians and families on the Forbes list, the polls in fact could only reflect what people were thinking and could not predict accurately beyond a few days. In the middle of last week, for instance, both Datum and Apoyo had Keiko just ahead, but by Saturday Apoyo was sending its expensive banking clients clear and accurate predictions of a clear Humala victory. But this was after the markets had closed for the week.
  • The most disconcerting part of this scrappy match continues to be the complete dis-articulation of the center-right, as represented by PPK, Toledo and Castañeda. In November PPK went privately to Toledo to try to forge a deal under which PPK and Toledo would together contest the election. Toledo would hear none of it, and that was that. Toledo, a low-achiever president, proved to be a hopeless campaigner, despite heavy financing and his once-30% imploded on voting day to 15%-odd.PPK was clearly, of all the candidates, the one most capable of running a country in the 21st century. He was unable, however, to raise the cash needed for a hard-run campaign against a well-financed field. Both Keiko and Humala had plenty of cash but PPK, known personally of course to every banker and leading businessman in the country, had to finance his effort out of his own pocket.The kind of money involved might have been $3 million, perhaps $5 million. More than a hundred times that was wiped off the value of quoted shares in five minutes on Monday, and much more in other values. The coming years will for sure compound this as, the voting tsunami lines the pockets of a few, but salts the wells of families all over Peru.

Today’s Economic backdrop:

Prices on the Lima stock market collapsed at the open Monday in response to the preliminary results of the voting on Sunday and, following down-the-limit procedures, was closed for a couple of hours.  When it reopened the indexes were down around 12%.   Peru-related shares on the New York Stock Exchange, NYSE instantly reflected the negative view of the business community by sinking strongly and by midday Banco de Credito/Credicorp, BAP, shares were down 14% to 87, while the Peru Investment Fund, EPU was down 12% at 38.50.
Earlier this year BAP had been at 120 and EPU at 50, so both have lost around one-quarter of their value so far this year.
Peru stocks continued to fall in afternoon trading on the NYSE.   BAP was nearly 20% down on the day at 82.   This meant a loss to shareholders just on Monday of well over $2,000 million, two billion, dollars.

EPU, the Peruvian investment fund, at 37.50, had lost a face value of around $500mn for the day.

Total face-value looses on publicly-traded shares were in excess of $6,000 million, six billion dollars.

Published June 6, 2011 by  

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