While the weak peso should benefit Chile’s export-driven economy, it is leading to a wider current account deficit at a time when investors willing to embrace emerging markets equities are prizing those markets with account surpluses or, at the very least, narrowing deficits. It is estimated Chile’s current deficit will grow to 3.7% of GDP this year from 3.2% last year, Reuters reported.
Adding to the lack of attractiveness regarding Chilean stocks at the moment is that the market is not deeply discounted as other developing economies. The MSCI Emerging Markets Index trades at a 11 times earnings, but ECH’s P/E is more than double that.
iShares MSCI Chile Capped ETF
