Chilean stock market hits 3 year high, what the hell?

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Chilean stock market hits 3 year high, what the hell?

Postby admin » Wed Oct 19, 2016 2:33 pm

The IPSA just hit a 3 year high , but the peso is being relatively stable. I know inflation dropped, and the central bank held rates stable, but that does not really explain it.

All of Latin american markets are up. Which I suppose does help, as a lot of Chilean companies were depressed by earnings in neighboring countries.

Copper is doing o.k., but still nothing to write home about.

There has been a lot of foreign buying in the stock market.

The only thing I can think of to really move it would be China's GDP number yesterday, but I find it hard to believe that one fudged number from China is sufficient to light a fire under latin America.

Any one else got any ideas?
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Re: Chilean stock market hits 3 year high, what the hell?

Postby admin » Wed Oct 19, 2016 2:59 pm

I have digging through some of the articles about it, and most are just more bla, bla, bla, about what pretty much was known back in January. This explanation caught my eye, and I guess I sort knew that one two, but it is more explicitly stated:


Overall, we believe emerging market equities and currencies remain attractive on a relative basis.

First, emerging markets' macro recovery appears to be gaining strength. This time the boost to growth is not just com¬ing from stimulus in China. Brazil and Russia have been turning too. On aggregate, the manufacturing purchas¬ing managers' indices for emerging markets rose to 50.7 last month, above the 50 level that separates expansion from con¬traction. The fact that the recovery is broad-based makes it look sustainable.

Second, this seems to be feeding through into earnings. The earnings revision ratio for emerging market equities, which measures analyst upgrades versus downgrades, was at minus 40 percent in February, indicating far more downgrades. Now it is close to zero, pointing to a marked improvement in sentiment. This has been a reliable indicator of future returns. The actual earnings have stabilized too. The revival of energy and materials prices is contributing to this rebound.

Third, a shortage of alternatives is also a positive. Net inflows into emerging markets are set to be positive for the first year since 2012, according to EPFR data. Revealingly, 90 percent of the inflows have come after the Brexit vote, when the UK voted to leave the European Union. With Europe under stress, leading emerging nations seem less trou¬bled by comparison.


That would be very ironic if Emerging markets are now considered the least risky place to park money. Between the U.S. election / fed, and the European Union being the European Union, it does seem like Emerging markets are a lot less risky. Especially if you can borrow investment money at low to no interest rates in the developed world, and park it in an Emerging market that is paying a higher interest rate.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby Britkid » Wed Oct 19, 2016 4:33 pm

I don't follow the stock market, especially not in Chile, but interesting news.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby Britkid » Wed Oct 19, 2016 4:36 pm

Oh wow, that was my 999th post, and this will be my 1000th. Not a huge amount less than 1 per day since joining around 1,400 days ago. Perhaps I need to get out more.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby fraggle092 » Wed Oct 19, 2016 5:14 pm

Just following intenational market trends according to this.
Nothing much else happening locally.
Après moi, le déluge

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Re: Chilean stock market hits 3 year high, what the hell?

Postby admin » Wed Oct 19, 2016 6:32 pm

O.k. figured it out. Some one bought 10 shares of stock. Who was it?

Not far from the truth, given the low volumes the last year or so in the markets.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby admin » Wed Oct 19, 2016 6:33 pm

Hey congrads on the first 1000. Yea you should get out.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby jehturner » Wed Oct 19, 2016 7:27 pm

Yes, I was going to say maybe it's the same investors that are ditching UK gilts...

Personally, it looks like time to buy some Sterling, reportedly at something like a 165-year low!

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Re: Chilean stock market hits 3 year high, what the hell?

Postby admin » Thu Oct 20, 2016 8:54 am

Well, the other one, locally driven, that might explain it is that they just signed in to law regulations to allow AFP's in Chile to invest in more than the super safe set of stocks and bonds.

Everyone was bitching about the performance that the AFP's were producing in recent years, but part of the problem was they were hobbled by super conservative restrictions on what they could invest in. Restrictions that most international pension funds don't have. For instance, they can not invest in various private infrastructure companies like the highway toll roads, or closely held private companies. Think there is like 170 billion dollars or something that just got spread around the economy.

So, my bet is, that international investors, are betting on shot in the arm to the rest of the economy as the AFP money get's spread around a bit more to the larger economy.

One morning with my wife, they had the AFP returns on the news. The return on the most aggressive, like what young people would be invested in, and it was like 3-4% a year, and some negative.

I dump an investment that does not returning more than 3% a month, let alone a year. I have better places to put my money, if there is not something like a 25% upside. You can open an apple cart on the street corner and do better. What the hell are these guys investing in?
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Re: Chilean stock market hits 3 year high, what the hell?

Postby jehturner » Thu Oct 20, 2016 12:39 pm

admin wrote:One morning with my wife, they had the AFP returns on the news. The return on the most aggressive, like what young people would be invested in, and it was like 3-4% a year, and some negative.

That's not too suprising if the fees are anything like the Chilean Fondos Mutuos. They seem to operate a model of customer puts down some capital, bank invests it, keeps the profits and gives customer their capital back (plus or minus any volatility)! Completely insane annual fees like 3-6% on equity funds (more often the latter). Meanwhile, the rest of the World is having a big debate about it not being worth paying a fund manager 0.7% because it eats into your returns so much compared with 0.1% in index funds...

Cheers,

James.

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Re: Chilean stock market hits 3 year high, what the hell?

Postby admin » Thu Oct 20, 2016 4:18 pm

yea, you open up their perspectives (if you can find an up to date one, and then dig, dig, dig), to find out they are charging old school like 1970 or 80's style full load fund fees.

The one that blew me away, offered by Santander, was a "U.S. total market fund" or something like that. After, digging, and digging, and digging some more through their documents, I finally figured out what they were investing in. They were buying low costs index funds from the likes of Vanguard in the states (what they charge now like 0.35% a year), then charging 5% plus for the privileged of them letting a computer somewhere else do all the work. I still never figured out where the rest of the money was going because those funds in the States, even after the B.S. fees, had returned more money over the last few years than they were showing on their history of the fund. There was like 3-4% still missing, even after accounting for exchange rates.

Another one, our bank executive insisted that we invest in some Bullshit bond fund. I started asking some basic questions about it, and they had no idea what it was, who counter parties were. She called the broker that was suppose to place the purchase, and he could not tell us what it was either. I was like yea, "if you can't tell me what the hell it is, I don't want it." Besides, what it was suppose to pay in a year, after fees, did not even cover the costs of the gas to go waist my time talking to them about it. I was already down my time wasted with bullshit investments.

The really screwed up thing is, that a lot of the international ETF and funds are available on the Chilean stock market. Just the stupid consumer level brokerages, like most people use through the banks, will not even give you the option to invest in them. You have to go through a super complicated phone call system, that of course they are going to charge you for, in order to place an order. Hope it is something close to the market. You only get 5 days max on a limit order. You won't find out for at least 24 hours if even went through. It is only slightly better than old school, buy the newspaper in the morning, and call your broker. In other words, you can day trade the market in Chile; if you have a lot of days. You can trade one day, for another day, and another day.
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Re: Chilean stock market hits 3 year high, what the hell?

Postby paladin » Thu Oct 20, 2016 6:01 pm

jehturner wrote:Yes, I was going to say maybe it's the same investors that are ditching UK gilts...

Personally, it looks like time to buy some Sterling, reportedly at something like a 165-year low!


I think there is something wrong with the report on Sterling as I can remember back in the mid 80's when it more or less touched 1:1 $:£. I remember it well as I transferred money from $ to £ to buy a place for my daughter. I think it went through at around 1.06.


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