The Chile country-specific exchange traded fund surged, with Chilean stocks touching record highs, after conservative Sebastian Pinera won the presidential election by a wider-than-expected margin.
The iShares MSCI Chile Capped ETF (NYSEArca: ECH) gained 10.2% Monday and was up 8.5% over the past week on election expectations.
Chilean markets rallied on expectations of further business-friendly policies under Pinera, reports Bruno Federowski for Reuters.
Pinera’s proposals are seen as pro-mining in the world’s top copper producer, pledging to support stable funding for state-run metals miner Codelco. The new president has also promised to cut down on red tape that hindered projects under the outgoing President Michelle Bachelet.
Chile’s economy has suffered through its slowest four years of growth since the early 1980s and the country’s first credit downgrade in several decades. Many in the business community blamed Bachelet’s programs of increased corporate taxes and labor reform for the decline in investments.
“Pinera’s campaign agenda focused on investment and growth, and we believe the administration will articulate policies with that aim, which should help to consolidate the upbeat business and consumer expectations,” JPMorgan economists said in a report. “That said, Pinera’s administration will need … political savvy to negotiate laws in a fragmented Congress.”
Shares of construction companies, Some banks and miners advanced by double digits. ECH includes a 18.5% tilt toward financials and 12.2% to materials.
The newly elected president has pledged to cut corporate taxes and ease industry regulation in a bid to more than double economic growth and add 600,000 new jobs. He promised reforms under outgoing President Bachelet will not be removed but he will provide a new pro-growth tone to the government, report Philip Sanders and Javiera Quiroga for Bloomberg.
“Together, we can transform Chile into a developed nation,” Pinera told supporters late Sunday. “Into a Chile without poverty, with opportunity for all. Chile will recover the path of progress and development.”
For more information on Copper ETFs, visit our Copper category.