Chile prudently invested its wealth from the previous commodities upsurge and now the economy, along with subsequent exchange traded fund (ETF), may be in a position to recuperate in a timely fashion.
Moody’s ratings agency recently upped Chile’s credit rating, making it the first investment-grade country to be elevated this year, writes Paul Harper for Seeking Alpha. The foreign debt rating was raised from A2 to A1 in an optimistic outlook.
Chile has put $22 billion of savings in wealth funds, or 13% of its GDP, which was mostly contributed by state owned copper-producer Codelco. The country supplies roughly 20% of the world’s copper. Copper prices are also slowly rising, and policies aimed at recovery in China has expectations of driving up metals demand by the end of the year.
The central government has promised a $19.5 billion package that includes tax cuts and subsidies to help reduce economic contractions. Economists think that Chile is likely to evade a recession.
Loans are growing in the banking sector, but it is still slower than in Western countries.
- iShares MSCI Chile Investable Mkt Idx (ECH): up 19.2% year-to-date; Codelco is 15%; note that the fund is above its 200-day and 50-day moving averages
Max Chen contributed to this article.
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