Leadership keeps showing up in places no one’s watching. Take Peru.
The Peruvian Sol (PEN/USD) just registered its best single-day performance since 2023, reaching fresh five-year highs against the US Dollar.
For anyone following the “weak dollar trade,” this shouldn’t come as a shock. Emerging market currencies continue to break out around the globe. Evidence keeps piling up that this trade has legs.
Even this thinly traded currency from a country without flashy tech giants or cutting-edge growth stocks is breaking out.
As JC likes to put it, Peru’s economy is about digging holes in the ground to pull out rocks. Funny as that may be—right now, the digging is working.
Natural resource stocks have been trending well, and Peruvian equities—heavily weighted towards metals and mining—are making new all-time highs.
Here is the PEN/USD cross overlaid with the MSCI Peru ETF $EPU:
With the local currency now confirming the action from stocks, we’ve got a unified message: money is flowing into Peru. And that’s a trend we want to be part of.
Peru isn’t the first country you think of when you scan for global equity leadership, and that’s exactly the point.
No one is paying attention to Peru right now, as it follows the same playbook we’ve seen over and over again this cycle: stronger currency equals stronger equities.
We don’t want to buy PEN to express this trade, though. It’s illiquid, and the real beta is in the equities market.
The Peruvian leaders are already breaking out of massive bases. Let’s talk about how we’re trading them.
For broad exposure, we’re looking at the MSCI Peru ETF $EPU:
EPU is emerging from a fifteen-year base. I jumped the entry back in May, and the breakout is just now confirming.
If we’re above 51, the path of least resistance remains higher, and we’re targeting 72.
For our individual equity exposure, we’re leaning on relative strength. Right now, we have two stocks breaking out of massive multi-year bases.
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