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

Chile Investment, how to invest in Chile, what to watch out for when investing, economic issues, currency exchange in Chile, and more.
User avatar
eeuunikkeiexpat
Rank: Chile Forum Citizen
Posts: 6408
Joined: Fri Sep 01, 2006 1:38 am
Location: Megalith of unknown origin near my digs, south V Region coast

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

Postby eeuunikkeiexpat » Tue Oct 25, 2016 5:47 pm

USD/CLP also moving quickly to the strength side (wasn't it around 670+ about two weeks ago?) which is really strange when the USDI hit 99 the other day. Copper, gold and silver also gaining strength or hanging tough despite the much stronger USDI...
Generally, just a SPAM KILLER. You are on your own in this forum. My personal mission here is done.

BUT when necessary, by way of ridicule and truth revelation we shalt do war.

--eeuunikkeiexpat

User avatar
admin
Site Admin
Posts: 14303
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

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

Postby admin » Tue Oct 25, 2016 7:59 pm

well this article is blaming the peso strength on the election too:
http://www.bloomberg.com/news/articles/ ... -coalition

I am not sure if the tail is waging the dog here, but seems to be happening.

this forecaster is predicting 640 for the rest of the year, and is saying the fed reserve is not going to impact it.
http://www.bloomberg.com/news/articles/ ... st-bullish

Still, I think the flow I am trying to wrap my brain around is: investors borrow money from say the U.S. or Europe at low to negative interest rates, they take the carry trade trade to Chile, buy local bonds or even stocks with it. The fed is going to raise interest rates, but that quarter point, low and slow rise, makes that trade work for at least another year. Especially if the peso is strengthening and the returns on the stock market are outstripping their leverage in the other economy. I think I got that right.

Which all leads one to wonder just how useful the stupid fed and europe is, if all they are doing is making it really cheap to invest in some other economy. No wonder there is growth in the emerging markets. The fed is paying for it. Thank you very much for the care package grandma.

For Chilean companies, at least the good ones, over the last couple of years, they have been investing heavily in Colombia, Peru, and even the United States. BCI just bought bank in Florida. Copec just bought a regional chain of gas stations and convenience stores in south east U.S.. Copec also just bought a bunch of OSB manufactures in Europe, think africa, and the United States (yea, that gas station has its fingers in the lumber industry) to become the second largest chipboard manufacture in the World (according to them anyway).

Lan did there merger at really bad time with TAM, but they are now starting to get their money back out of Brazil as it recovers. Not to mention just about every other country south america that has been beaten down.

Parque Arauco just announced they are buying out another partner in Peru, and I think that is like number 7 this year. They are heavy colombia too.

Falabella is doing the same thing in Peru and Colombia.

The key I think to all those guys, they are playing on the population growth of the emerging markets. So, those guys should be seeing some real organic growth over say the next 5 years, after getting beat up over the last 3-5 years.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

MJSaywell
Rank: Chile Forum Citizen
Posts: 149
Joined: Fri Oct 30, 2015 8:22 am

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

Postby MJSaywell » Tue Oct 25, 2016 11:37 pm

Let the good times roll then ? Dollar at 653 glad I sold out at 680 a month ago.

User avatar
FrankPintor
Rank: Chile Forum Citizen
Posts: 1127
Joined: Thu Aug 09, 2007 4:53 pm
Location: Guayaquil, Ecuador

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

Postby FrankPintor » Wed Oct 26, 2016 12:17 am

admin wrote:For Chilean companies, at least the good ones, over the last couple of years, they have been investing heavily in Colombia, Peru, and even the United States. BCI just bought bank in Florida. Copec just bought a regional chain of gas stations and convenience stores in south east U.S.. Copec also just bought a bunch of OSB manufactures in Europe, think africa, and the United States (yea, that gas station has its fingers in the lumber industry) to become the second largest chipboard manufacture in the World (according to them anyway).

Lan did there merger at really bad time with TAM, but they are now starting to get their money back out of Brazil as it recovers. Not to mention just about every other country south america that has been beaten down.

Parque Arauco just announced they are buying out another partner in Peru, and I think that is like number 7 this year. They are heavy colombia too.

Falabella is doing the same thing in Peru and Colombia.

The key I think to all those guys, they are playing on the population growth of the emerging markets. So, those guys should be seeing some real organic growth over say the next 5 years, after getting beat up over the last 3-5 years.

Probably a good bet in the long term but it could be a rough ride. Entel took a bath in Peru, not sure if they're making money yet. There are Parque Arauco's springing up all over, but my feeling is that Peruvian growth is fragile. Middle class too small, terrible education system, meaning huge population of poor and uneducated people with no culture of studying or working. Their economy is based on mining and very little else.

Colombia is a bit wobbly as well, if the peace agreement had stuck I would say they'd be looking at 10-15 years of growth at 5% per year. I heard Ripley are pulling out of there.

LAN should really be looking at the Viva Colombia / Ryanair model, that's what developing countries need, not a full service joyride for the 1%.
Caracas es Caracas. Lo demás es monte y culebra!

User avatar
admin
Site Admin
Posts: 14303
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

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

Postby admin » Thu Oct 27, 2016 3:07 pm

No, I call investment in Chilean companies, as a proxy to the rest of Latin America a bet on the demographic growth. Same with the whole emerging market. I would never buy say an EM index fund. Emerging markets are all about tactical purchases.

The basic bet is this however. From the relative safety and stability of Chile, buying Chilean companies with good long-term expansions plans in to the neighboring countries, gives you exposure to the population growth with a lot less of the risk. Chile is like 18 million people. Colombia, like 47 million. Peru, 30 million or so. That is a hell of an expansion in market base. Especially targeting the middle class to wealthier end of the demographics. I have not been to peru in years, but I hear upper end of economic spectrum is doing well and growing.

Colombia was on fire last time I was there, and Chilean companies were everywhere. What strikes me about both, is they have that classic Goldie locks zone of development going on. both got a recent pull back, but I think just sufficiently to take to stop overheating.

After decades of instability, general stability (even if they have a lot of problems still) has broken out everywhere.

That is where the largest amounts of money have ever been made in any EM economy. When the chaos settles sufficiently long for people to really start making long-term investment decisions, and their is a massive pent-up consumer demand (e.g. china opened it's markets, Mexico post-peso collapse 1980's, Chile after the dictatorship, hell, the U.S. after WWII, etc); but, before everyone jumps on the bandwagon and over saturates the market to squeeze just a little more return out of an already fully milked and overheated economy (e.g. China today).

Knowing when to get out, I have found a pretty reliable indicator. It is when all the stupid financial English language media starts writing articles about the "economic miracle" of country X (e.g. Argentina, Brazil, so on). There was actually a great article, I think last year some time, looking at how frequently the use of the word "miracle" was used in articles referring to countries, and how soon after their economies collapsed or went in to recession. It happens so often in Argentina, it makes a great case study, that is sure to be repeated.

Everyone is freaking out about the lack of global growth. It is just not true. What they are talking about is a lack of global growth in the developed countries. The Emerging Markets are where the action will be at for the next 50 years, of course with lots of ups and downs, but sure a hell of lot more opportunity than the developed markets.

For Chile's part, due to it's advanced stage of development and lack of population growth, is for the most part not going offer much to Chilean companies by way of growth. The pie has already been sliced so thin among companies for the 18 million people, that they have to look outside of Chile for growth. Chile has still got some room to develop / grow more, but the pace will be limited.

Think about it. Do you really believe the U.S. and European economies are going to fix their problems anytime soon? Even if they magically did, it would be another 10 years before they start taking off again. Even at that, they have serious demographic issues that will keep put a cap on their growth, no matter what they do. In spite of all the anti-immigration b.s., they better throw open their doors and layout the red carpet for every young immigrant they can get their hands on.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 14303
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

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

Postby admin » Thu Oct 27, 2016 5:02 pm

Well, it is hard to tell just how much of mess Bachelet made out of the economy with her increase in tax on real estate sales, but how about a 38% drop in sales over this time last year in Santiago.

http://www.biobiochile.cl/noticias/naci ... tana.shtml

I have this sneaky suspicion, that what is going to happen as this fully plays out over the next few years, is there is going to be housing shortage in Chile. Resulting in sudden and dramatic price spikes.

Everyone rushed to close deals on properties, often moving up purchases last year that they might have waited for until this year or next year, to avoid the new tax. Thus, sudden drop in demand this year. At the same new houses will be that much more expensive, throttling the construction and sale of new houses for a while. The cut back, will just add fuel to the fire. Markets, say Puerto Varas for instance, that were already super tight for housing, are going to get even tighter. At some point the prices will give, but rather than a slow steady climb, there will be some sudden and surprise shocks to costs to purchase houses and apartments in the tighter markets.

So, bachelet, and her socialist clown car have struck again. Snatching candy from the middle class and lower class that were almost about to get their first house, or their second investment property. Never mind shooting the construction industry in the foot. You know, one of the best paying industries in the country for the uneducated and mostly low skill labor force that can not get jobs in other industries.

Someone should give her a Nobel prize in economics.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
FrankPintor
Rank: Chile Forum Citizen
Posts: 1127
Joined: Thu Aug 09, 2007 4:53 pm
Location: Guayaquil, Ecuador

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

Postby FrankPintor » Fri Oct 28, 2016 11:38 pm

admin wrote:No, I call investment in Chilean companies, as a proxy to the rest of Latin America a bet on the demographic growth. Same with the whole emerging market. I would never buy say an EM index fund. Emerging markets are all about tactical purchases.

OK, I get it, this makes sense. I didn't realise this is what you were writing about. Chilean companies have invested very successfully, even in hostile environments like Argentina and Peru.

admin wrote:Peru, 30 million or so. That is a hell of an expansion in market base. Especially targeting the middle class to wealthier end of the demographics. I have not been to peru in years, but I hear upper end of economic spectrum is doing well and growing.

Peru is a study in contrasts. The upper end of the economic spectrum in the Miraflores and San Isidro bubble is doing well (when has the upper end of the economic spectrum ever done badly? :wink: ) but even if it's growing, it's very small. In some previous post I mentioned the "pueblos nuevos", they're 2x4 shacks (shack is generous, they're made of "mimbre") pitched on the sand with no water, electricity, or any services and as far as I know they surround every city in Peru. The poor in Peru haven't advanced since the Incas ruled them. I see the country running into the buffers.

admin wrote:Colombia was on fire last time I was there, and Chilean companies were everywhere. What strikes me about both, is they have that classic Goldie locks zone of development going on. both got a recent pull back, but I think just sufficiently to take to stop overheating.

I think you were there shortly after I left, I wouldn't say it's on fire, but it has huge potential. It could be a magnet for investment if they sort out the peace treaty with the FARC.

admin wrote:Think about it. Do you really believe the U.S. and European economies are going to fix their problems anytime soon? Even if they magically did, it would be another 10 years before they start taking off again. Even at that, they have serious demographic issues that will keep put a cap on their growth, no matter what they do. In spite of all the anti-immigration b.s., they better throw open their doors and layout the red carpet for every young immigrant they can get their hands on.

Well there you go. I said Angela Merkel was right.
Caracas es Caracas. Lo demás es monte y culebra!

User avatar
admin
Site Admin
Posts: 14303
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

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

Postby admin » Sat Oct 29, 2016 5:32 pm

Na i definetly have my suspicions about peru. Based on what i seen like 15 years ago when i was there, it really had that feal of a country that the class divide will always keep it from reaching it's full potential.

I got way more interest in colombia and where it is going.

Overall i am looking for 10 to 20 year investments in the EM, in countries that are overall on the right trajectory or a sustainable growth trajectory, while trying avoid the countries that cycle through mega booms and busts.

I guess i would put it another way. Once you have seen a proper sampling of developing countries you sort of get a feal for what is real development, countries really making a breakout, and what is political b.s. or hedge fund hype that will implode. Much of that really i think is a cultural thing, more than pure economic thing.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Britkid
Rank: Chile Forum Citizen
Posts: 1128
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

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

Postby Britkid » Sat Oct 29, 2016 9:29 pm

Chile also seems to have quite a class divide, how would you compare Chile and Peru in this regard. If a class divide would stop Peru reaching its full potential, the same might be true in Chile?
I blog on life in Chile at http://www.idledreamer.com

User avatar
eeuunikkeiexpat
Rank: Chile Forum Citizen
Posts: 6408
Joined: Fri Sep 01, 2006 1:38 am
Location: Megalith of unknown origin near my digs, south V Region coast

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

Postby eeuunikkeiexpat » Sat Oct 29, 2016 11:29 pm

Britkid wrote:Chile also seems to have quite a class divide, how would you compare Chile and Peru in this regard. If a class divide would stop Peru reaching its full potential, the same might be true in Chile?

I'm a foreigner in the front lines as you should be as you are married to a supposedly non ABC1 Chilean. There is mobility in Chile and education AND the right attitude is a large part of it. Of course having clear eyes and lighter hair and <surprise> even a foreign name helps <my very grown adult stepdaughters have taken on my Okinawan apellido and my nietos now have it and it confirms what I've heard previously of how this helps in the job market>.

All of my wife's brothers and sisters have acquired professional positions along with many of her cousins and their fundamental roots were poor/working class from the south + immigrants from France.
Generally, just a SPAM KILLER. You are on your own in this forum. My personal mission here is done.

BUT when necessary, by way of ridicule and truth revelation we shalt do war.

--eeuunikkeiexpat

User avatar
admin
Site Admin
Posts: 14303
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

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

Postby admin » Sun Oct 30, 2016 9:14 pm

I think i would put it as there are economic opertunities within a class in chile. Yea, if you come from the lower classes in chile you might not get invited to certain circles' dinner parties, but you can still make money and generally improve your position in life.

Colombia i would generally say the same is true, based on long discussions with colombian friends.

Peru strikes me as the sort of country that has massive class and economic divides that will never mix.

Sort of horses in a team, on diffrent leads, but generally all going in the same direction and pulling the same load vs. Pulling in oposite directions so no one ever gets to go anyware.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

jehturner
Rank: Chile Forum Citizen
Posts: 1376
Joined: Thu Nov 20, 2008 12:24 am
Location: La Serena

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

Postby jehturner » Sun Nov 06, 2016 9:11 am

Thanks belatedly to those who posted links to USD/GBP data (didn't think of Wikipedia for that...). The past couple of weeks have been insanely hectic. What would be really useful is long-term historical data for different stock markets (already have the ~30 years of the FTSE100), if anyone has pointers to such info.?


Return to “Chile Investment, business, and Money Issues”

Who is online

Users browsing this forum: No registered users and 11 guests