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Pedro Castillo wears a giant cowboy hat and giant yellow pen – the symbol of his political party – and cuts a folk, colorful figure as he travels through Peru to fight for the presidency.

But no one is amused among the business elite in Lima and in the boardrooms of the mining companies that generate much of Peru’s wealth.

Castillo, a 51-year-old school teacher and union leader, emerged from the political darkness and won the first round of voting last month with an outrageously Marxist ticket.

His party, Peru Libre (Free Peru), wants nothing less than a revolution in Latin America’s fifth largest nation to overthrow the free market model that has ruled the country for a generation.

In its manifesto, the party says that foreign mining companies should be forced to pay 80 percent of their profits to the state instead of the “miserable” 10, 20, or 30 percent they pay now.

“If the companies don’t accept the new conditions. . . The state must proceed with nationalization, ”warns Peru Libre.

The problem with a runoff between Castillo and Fujimori is that so many voters see both candidates as fundamentally reprehensible

The party’s founder, Vladimir Cerrón, names Hugo Chávez and Nicolás Maduro from Venezuela, Daniel Ortega from Nicaragua and Fidel and Raúl Castro in Cuba among a selected “group of presidents who have given the continent dignity”.

“The program is a return to the 1970s,” said Roxana Barrantes, economics professor at the Pontifical Catholic University in Lima. “You read it and you think ‘my god, what is that ?!'”

The financial markets are unsurprisingly shaken – not only by Castillo’s bountiful first-round victory, but also by subsequent polls which suggest that he will, in next month’s runoff election, Keiko Fujimori, daughter of the country’s former authoritarian president Alberto Fujimori, has a clear lead over his rival.

In the two weeks following the first vote on April 11, Peru’s currency, the sol, fell more than 4 percent, hitting a historic low of 3.85 against the dollar, while the stock market fell over 12 percent. The spread between 10-year Treasuries and US Treasuries widened by over 71 basis points and the cost of hedging against payment defaults rose, with five-year credit default swaps peaking after the first round this year.

A recent corporate survey found that three-quarters of Peruvian companies put their investment plans on hold until after the June 6 elections.

“We don’t have any information about capital flight yet, but all the anecdotal evidence suggests that people are trying to get their money out of it,” said Alonso Segura, a former finance minister.

“I have friends who are asset managers who are overflowing with work opening bank accounts for people in Panama and the US. It’s hard to know how widespread and representative this is, but it definitely happens. “

Keiko Fujimori challenged the president’s front runner, Pedro Castillo, to an impromptu debate. © Francisco Vigo / Reuters

It is not clear to what extent Castillo believes in the radical Peru Libre Manifesto, which also calls for a new constitution drafted by a popular assembly and a reassessment of the country’s free trade agreements.

Perhaps careful about wasting his leadership, he has given few interviews and made fun of the idea of ​​presidential debates.

Fujimori knew that she had to go on the offensive and last weekend traveled to the city of Chota high in the northern Peruvian Andes, where Castillo has his electoral base. There she invited him to a spontaneous debate on a hastily arranged stage in the town square.

True to his party’s manifesto, Castillo turned to foreign multinational companies that he said had sacked the country.

“Gold, silver, zinc must be for the Peruvians,” he said. “It is time to choose a man of the people. No more poor people in a rich country! “

For those concerned about a Castillo presidency, there is solace in the math of Peru’s broken political landscape. In the next congress, Peru Libre will be the largest party with just 37 seats out of 130.

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Even with the support of other leftists, it will be difficult to get the third of the parliamentary votes Castillo would need to avoid impeachment, let alone the two-thirds he would need to amend the Constitution.

“Look at his suggestions. They can only be implemented if you have absolute control over Congress, ”said Alfredo Thorne, former Treasury Secretary. He said big mining companies would just leave if Peru took a sharp left turn.

“With the price of copper where it is, most mines around the world are profitable. You don’t have to be in Peru to mine copper. “

One month more, Fujimori still has a chance of victory, despite being about 10 percentage points behind and loathed by many Peruvians who associate her with her father’s rule of division in the 1990s and her own recent congressional obstructionism Years.

More than two thirds of the voters did not vote for any candidate in the first round. Around 10 to 18 percent say they don’t know who to support in the second round, and up to a quarter say they will spoil their ballot papers.

“The problem with a runoff between Castillo and Fujimori is that so many voters see both candidates as fundamentally reprehensible,” said the political adviser Teneo.