With a reputation as one of the world’s most economically progressive free market-focused
nations in Latin America, the global commodities market could take Chile’s exchange traded fund (ETF) to new levels.
The country’s economy has grown from ties to international markets, and
many are pondering if the U.S. slowdown will affect the country’s
continued growth.
Chile emerged from a recession in 2000, reports Don Dion for Seeking Alpha, and since then it’s experienced hearty growth. In 2007, its economy grew 5.1%. A similar rate for 2008 is projected.
The country benefits from a rich supply of natural resources, especially copper; it produces one-third of the world’s supply. In addition to that, it trades
fish, wine, pulp and paper products, fruits and chemicals. Only 15% of
the country’s exports go to the United States. It’s far more reliant on
trade with Asia.
On the downside, Chile could be on the brink of an energy crisis, caused primarily by a drought and a natural gas shortage. However, two of the iShares MSCI Chile (ECH) top holdings, the National Electric Company (EOC) and Enersis (ENI), could benefit. They appear to be positioned to produce enough power to take advantage of the higher prices.
So far this year, ECH is up 11.3%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.