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    Nov 24, 2017

    Chile stocks - Tactical opportunity?

    in EMgist Live

    We opened a small tactical long Chilean equities on Wednesday (ETF ticker: ECH) on better valuations. We also speculate that elections that are still likely to lead to a win by centre-right Vamos coalition's Sebastian Pinera. Also, it's not often mentioned by press, but the worst outcome - a second-place finish by Beatriz Sanchez from the far left Frente Amplio - did not materialize and this should anchor expectations from the most dire of political scenarios. Faced with the choice of either a conservative govt or a status quo govt (under Alejandro Guillier from Nueva Mayoria coalition), leftists are unlikely to be turn out for the 17 Dec second-round elections, though this disenchantment is a long-term challenges that needs to be addressed by the next administration.


    ECH ETF (black) vs IPSA stock index (blue), CLP (purple) and copper futures active (orange):


    This recent read by Frontier Strategy Group suggests we may get a market-friendly outcome in the upcoming elections - even if the new govt's mandate/challenges are even greater than what markets widely assumed going into last weekend's first-round election.


    Ref:

    • 1/ Sebastián Piñera has already received unconditional support from far-right candidate José Antonio Kast

    • 2/ Anti-Piñera vote alone will not mobilize Frente Amplio voters

    • 3/ Guillier has a more difficult balancing act to court voters


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