Hedging bets.

The minerals boom is driving growth across the Peruvian economy--even bolstering the Lima Stock Exchange. Fear of nationalization during the recent election cycle pushed foreign companies to list here in hopes of involving more local investors. But it's also just money, lots of money in Peruvian hands, thanks to high metals prices, that foreign miners hope to mop up. Lima's venture capital market has grown from an initial total capital of US$13.9 million in 2005 to $377.7 million in 2006. "There is a lot of liquidity in pension funds, mutual funds and banks and a low offer of financial instruments, which makes it very attractive to list here," says Julio Lock, an analyst at ratings agency Apoyo & Associados. Talk of nationalizing mining by former presidential candidate Ollanta Humala in the run-up to the 2006 presidential elections spooked foreign companies, says John Stanner of Rally Financial Group, which arranges financing for mining companies. Foreign companies can reduce exposure by involving domestic investors in their ownership, he says. "A local listing is a smart way of mitigating the longer-term risk," Stanner says. While giant international miners can use their size to sway policy, smaller companies are more exposed politically. Listing provides a kind of insulation. "In the project development stage, we don't have the presence that the bigger miners have, but [with a Lima listing] we are not viewed as a 100% foreign company," says Eric Peipz, chief financial officer of Peru Copper, a Canadian mining firm active in Peru which has listed but not yet raised money on the exchange.