Market Analysis

 iShares

Company in June 2009 launched its first fund linked to the index MSCI All Peru Capped Index. Commission on the U.S. market for this instrument is 0.63%. During the period from 22.06.09 TILL 31.12.09 yield index fund amounted to 33,80%, and from the beginning of 2010 he managed to grow by another 2.66%. Dynamics of the cost of the ETF is shown in Figure 1.

Consider the branch structure of the Fund, provided in Table 1.

Table. 1

Fig. 1

Source: Reuters

Thus, the leading share in the structure occupy the commodity index fund companies, followed by the financial sector, manufacturers of basic commodities and industrial companies. At utilities, energy, short-term bonds and other industries accounted for a total of not more than 16%. In such a situation becomes clear the secret of the success of the reporting instrument, as prices for raw materials since the beginning of 2009 showed significant growth.

As the largest companies in the index fund (Table 2), then here is focus on two mining giants, which together account for more than 30%.

Table. 2

source: iShares

Compania de Minas Buenaventura - on American Depository Receipts of Peru"s largest producer of gold and silver have to 17,6% in the structure of the MSCI All Peru Capped Index Fund. The company is the principal owner of mines in Peru, as well as it owns minority stakes in other industry representatives, that allows to diversify the income structure. According to the results of the third quarter 2009 net income of Compania de Minas Buenaventura was $ 148.5 million, a 48% higher than the values of the index over the same period of 2008, earnings per share for the period rose from 40 to 59 cents and total revenue increased by 11%. The company owns the fourth-largest silver mine in the world, as well as 43,65% th share in the most lucrative in the world gold mine Yanacocha. In addition, new technologies and developments allow Compania de Minas Buenaventura continuously increase reserves, production and income.

Southern Copper Corporation - the largest mining company in Mexico and Peru and the fifth miner of copper in the world. In addition to copper in the structure of the company"s products include silver, zinc, molybdenum and other metals, allowing it to diversify its earnings. At the end of the third quarter 2009 net sales of Southern Copper Corporation increased from $ 1 440.1 million to $ 1 151.8, and the increase of net profit in the third quarter amounted to 78,6% sq /sq.

Thus, MSCI All Peru Capped Index Fund is quite attractive instrument for investors who make a bet on the commodity market. The principal risks of investment in this ETF include the political, foreign exchange, as well as the risks associated with the situation onae9world commodity markets.

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