bullish on Chile?

Chile Investment, how to invest in Chile, what to watch out for when investing, economic issues, currency exchange in Chile, and more.
User avatar
otravers
Rank: Chile Forum Citizen
Posts: 1210
Joined: Wed Jun 20, 2007 9:48 am
Location: Concón, Region V

Re: bullish on Chile?

Post by otravers » Thu Sep 16, 2010 10:22 am

I'll have to remember to look at the share of Chile's exports to China and Germany at the end of the year, I'm guessing the mix might be changing a bit (with an expected relative decline in exports to the US as a proportion to total exports).

On the peso, Jose Piñera recently posted on Twitter: "Entre 1810 y 2010, precio promedio de la divisa fue $476 (expresado en pesos de poder de compra actuales)", Rolf Luders, Profesor UC." (and another former minister during the military regime.) He was probably refering to this article:
http://latercera.com/noticia/opinion/id ... mbio.shtml

A comparative purchasing power study over two centuries is no doubt an approximation, but it's counter-intuitive to what might have looked on the surface as a long-term decrease in value of the peso except in the past 5 years.

Edit: I haven't found Luders' research on exchange rates, but here's some of his work on long-term macro data for Chile vs. rest of the world: http://www.econ.uchile.cl/uploads/publi ... 0077bb.pdf

geneticoman
Rank: Chile Forum Full Member
Posts: 34
Joined: Sat Mar 27, 2010 12:52 am

Re: bullish on Chile?

Post by geneticoman » Tue Sep 21, 2010 12:20 pm

Santiago And Chile Ranked As Leading Latin American City And Country In Multiple Surveys
GlobeNewswire

SANTIAGO, Chile and NEW YORK, Sept. 21, 2010 (GLOBE NEWSWIRE) -- Chile and its capital city and business hub, Santiago, were once again ranked as leading locations in Latin America in several recent surveys. In the new Global Competitiveness Report 2010-2011 from the World Economic Forum, Chile was the highest ranked Latin American country based on a composite ranking of 12 "pillars" of competitiveness, including institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. In Newsweek's Aug. 23 issue , Chile was ranked the best country in Latin America based on a suite of factors including education, health, quality of life, economic dynamism and political environment.

"U.S. companies feel at home in Chile. We are one of the most business-friendly countries in Latin America," stated Nicolo Gligo, Executive Director of the Chilean Economic Development Agency (CORFO) in the U.S. "Chile has one of the freest economies in the world with a private sector that is the engine of the economy. In Chile, the infrastructure and institutions operate effectively, transparency is the rule and there are virtually no restrictions on foreign investment. And when you factor in the quality of life in Chile, there is no comparison."

These new rankings follow on the heels of AméricaEconomía Magazine's recent " Best Cities in which to do Business in Latin America" list, on which Santiago was again ranked as the leading Latin American city for doing business in the region. The only city to rank more highly than Santiago on the AméricaEconomía list was Miami in the U.S.A. For the city survey, AméricaEconomía reviewed 48 cities' primary investment attributes based on several factors including economic dynamism, business and executive services, infrastructure and environmental sustainability. Earlier this year, the Economist Intelligence Unit ranked Chile as having the best business environment in Latin America. In addition, the report forecasted further improvement by the year 2014, driven by the country's effective policies, labor market and infrastructure.

Chile is quickly becoming the innovation hub of Latin America and is taking proactive steps to ensure that it remains an attractive country for foreign investors and entrepreneurs interested in developing their businesses within its borders. Recently, the Chilean Economic Development Agency (CORFO) built on its existing slate of business incentives by launching the Start-Up Chile program, which offers entrepreneurs with high-growth business plans funding and logistical assistance, to support the launch and initial stages of their operations. The Start-Up Chile incentives, coupled with the many other support initiatives of the Chilean government, further enhance Chile's global competitiveness and complement its position as the ideal location for doing business in Latin America.

geneticoman
Rank: Chile Forum Full Member
Posts: 34
Joined: Sat Mar 27, 2010 12:52 am

Re: bullish on Chile?

Post by geneticoman » Thu Sep 23, 2010 7:50 pm

Chile's President Sebastián Piñera on "Renaissance" of Chilean Economy
Prepared by Carin Zissis
September 22, 2010

“We want to create a society of opportunities,” said Chile’s President Sebastián Piñera during September 22 remarks at the Americas Society and Council of the Americas. During his presentation Piñera outlined his administration’s goals to combat poverty, boost economic growth, and improve development. As AS/COA Honorary Chairman William R. Rhodes noted in his opening remarks, the new Chilean president was forced to “hit the ground running” when he took office in March, a few short weeks after the country was battered by the fifth largest earthquake on record. In spite of that disaster that cost the country $30 billion (or 18 percent of Chile’s GDP), Piñera said his government’s goal is to achieve 6 percent GDP growth during his four years in office.

The president delivered the speech less than a week after the Chile’s bicentennial and said “we want to take advantage of the spirit” felt in the country during the celebration. Looking at more recent history, he stressed that the time has come for Chile to wake up from an economic slumber. He compared Chilean growth between 1986 and 1997—when GDP rates averaged 7.8 percent—to the 1998 to 2009 period, when growth rates fell to 3.4 percent. “We are living a real renaissance in our economy,” said Piñera, who pointed out that Chile is now on track to rank twenty-fourth in the world, second in Latin America, and first among OECD countries in terms of growth.

“We want to create a society of opportunities,” said the president, who forecast that Chile would see the creation of 300,000 jobs in 2010 and one million jobs by the end of his term in order to combat poverty and promote entrepreneurship. Moreover, in the first four months of the Piñera administration, real salaries rose by 2.1 percent, unemployment dropped during the second quarter from 9 percent to 8.3 percent, and crime related to drug trafficking dropped while arrests rose.

Piñera focused on education and health improvements to improve social development. Government initiatives and achievements include:

* Cutting hospital waiting lists by 37 percent during a 60-day period.
* Doubling public investment in education, including direct educational subsidies for students in need to allow them to attend schools of choice.
* Creation of a network of schools of excellence.
* Access to laptops for all students by the end of 2012 to help students “join a society of knowledge and society of innovation.”

The president touched on the crises of the earthquake and the 33 trapped miners facing prolonged rescue. Despite the need for reconstruction, he said Chile, a creditor country, would not borrow funds for its reconstruction plan. He compared the trapped miners to the tale of Jonah in the whale and said their release would be secured as soon as November.

During a question and answer session following the remarks, Piñera commented on China’s rising importance as an economic partner, not only for Chile but also for Latin America in general. China represents 25 percent of exports for Chile—the world’s biggest copper producer—and is on target to become Latin America’s top investor, he said. Piñera noted that Chile decided long ago to have a “free, open, competitive economy” and, as such, has a trade agreement with Beijing. He suggested the United States catch up by approving the languishing trade accords with Colombia and Panama. “At the end of the day if United States doesn’t take those opportunities then someone else will do it,” he said, suggesting China could fill the gap.

geneticoman
Rank: Chile Forum Full Member
Posts: 34
Joined: Sat Mar 27, 2010 12:52 am

Re: bullish on Chile?

Post by geneticoman » Mon Oct 11, 2010 12:39 pm

Chile will be among largest economies in the world with high GDP growth in 2011

October 10, 2010

* Analysis by: GLG Expert Contributor

Summary

The Chilean economy will shine next year, with only minor expansion to China and India, with the help of a strong support in investment and dynamism of the construction sector the all the economic sectors will do their job.
Analysis

In a 2011 in which the bulk of the world economy recorded a slowdown in growth from this year, Chile will go in the opposite direction. Accelerate, to be among the three countries with the highest GDP growth worldwide. Nevertheless, the ability to shine as the 90 and being the diligent student of the class of more permanent is the big question that lingers in the horizon. This week, the new estimates of GDP growth of Central Bank for the country, with a maximum of 5.5% for 2010 and 6.5% in 2011 - joined the Imacec of 7.1% in July, setting a Table of expectation on the local economy. In this context, according to the latest projections of JP Morgan for about the 40 most important economies in the world, with a growth which provides around 6% Chile will lead the global growth next year, being surpassed only by China (8, 6%) and India (8.5%), accompanied by Peru (6%). Since 1995, when he scored an expansion greater than 10%, that Chile was among the 10 economies more dynamic. "Chile will be among the few countries in the world will not produce a slowdown in 2011 as the global online as across Europe, Asia, USA and the rest of A. America are setting a trend for moderation" says director of Moody's Latin America, Alfredo Coutinho. It's a feeling shared in Chile and the largest center for global market, Wall Street. "The growth of 6% by 2011 seems reasonable. The Chilean economy began to grow at a rapid pace in the second quarter and maintained a level of interest in the second half and in 2011," he said from New York, an economist at Goldman Sachs Alberto Ramos. John Edmunds, Babson College's academic, is betting that Chile will grow by over 6% in 2011, given the momentum from economies such as India, China, Australia, and Korea. "That has not been taken much into account, because the U.S. and European growth will not be very strong," he says from Boston. Investment is the key for experts, the car that will pull the cart of the economy next year will be the investment. The rate would reach about 30% of GDP, under the earthquake reconstruction program that will focus on transportation, construction and communications. "Chile has one of the key sources for growth, with an investment ratio of one third of GDP has to grow at sustainable rates of 6% on a continuous basis," said Coutinho, who says that rate, is comparable only to the investment ratios in Asia. In the same line, Ramos said that the construction will be the star in 2011, although he believes that exports, consumption and labor market have a good year. But economist Patricio Rojas, Rojas and Associates, puts numbers to push the growth sectors. Believes that communications will grow by 9% in 2011 and highlights the expansion that will transport (6% to 7%) and trade (6% to 6.5%). "But construction should be the major sector that will lead the strong growth of the economy next year. Assuming that this could happen growth rates of no more than 4.5% to 5% this year to over 10 % in 2011. If that happens, one could say that there is the basis for growth next year, "Overheating? While growth is very robust for several quarters next year, experts disagree on the possibility of overheating of the economy. "A scenario for growth of between 6% and 6.5% is doable, it's not an overheating economy, because there are several sectors of the supply side are going to need a stimulus, they were content," other expert Rojas, who he notes that the strong investment growth is driven by capital goods imports. "The Central Bank will be setting in inflation more attention and more likely to go ahead with its monetary tightening path. Therefore, the risk of overheating is almost nil," he adds. Angel Cabrera, a partner at Forecast, there is a significant increase in risk of inflationary pressures in 2011. "There is a risk that some define as inflationary overheating. To me, it's an ongoing process, because as the output gap is closing, with consumption growth rates of 10%, inflationary pressures increase gradually, which is already beginning to happen. This happens in stages, but it's going to intensify in the next 12 to 14 months, "says the expert. Alfredo Coutinho downplays the risk. He says that if growth exceeds 6% consistently during the four quarters of the year, that can generate excess demand and inflationary pressure. "If growth goes above 6% and then moderates, there should be no problem," he explains. The big question The big question that exists among experts is whether this high growth can be sustained for years. Associated with it, the question is whether the government can realize the reforms to improve productivity and potential growth, Bernardo Javalquinto, economist at JMLC believes that at the pace that Chile is growing, Chileans cannot cope with its rate due to the fact that Chile does not have skill labor force, insist that at solving the problems facing the local economy today relating to restrictions on labor markets and energy and matter competitive exchange rate. Additionally, while economists see a good chance that Chile will grow by over 5% in the next four to five years indicate that this also depends on external context. "Chile is a small open economy that reflects what is happening with the global economy. If the external environment remains favorable and the price of copper remains high, it is possible that Chile continues to grow above 5%. If the world economy is not as healthy be more difficult, "said Ramos. Stresses that the country's economy is well managed and without structural imbalances, which allows above-average growth of countries in the region. Coutinho is even more optimistic. "There will be a sustained growth of the Chilean economy in at least four or five years if the investment ratio to GDP ratio remains at average levels. Piñera Chile administration will be on average 5% growth, with some years on it, "he says. He thinks the concrete possibility of this virtuous circle of growth in the coming years due to reforms implemented in the past 30 years as expectations that concrete Piñera more liberal vision of the economy. "This administration would not be enjoying this stability with expansion if all this growth and change historical discipline had not been given. Yes there is a very important effect of what was done in Chile, which is now reporting significant results. But there is also eye of the President, which gives priority to investment and has a more liberal view in the sense that attempts to reduce state involvement in the economy, "concludes Coutiño. Javalquinto in the other hand, is very specific is worthless to growth at high rates if inflation is not controlled and if there is a big effort to invest in R+D+I in order to add value to all the natural resources that are exported. And to do that you need skill labor force which means that public and private must insist in better training and better education. In a recent opinion column, former Finance Minister Hernan Buchi, said some changes are still pending in the economy to enhance growth. "To have a permanent turnaround turnaround is needed for the incentives to use and produce, that does not exist," he said. In this line, the dean of the Faculty of Economics, Catholic University, Francisco Roseberry, also warns that unresolved obstacles that affect the potential. "The risk is that once we overcome the normal recovery from a recession back to the 4% growth, with slower increases in employment," he says. Alberto Ramos believes that the policies that might apply Sebastián Piñera not mean a radical departure from what has been done in previous administrations. "I think the policy change is so radical. Chile has had a policy framework always friendly to the market. There are always some differences on the rhetorical level if there is confidence about the market, but in terms macro policy framework, monetary and fiscal policies, is very good to have a high level of continuity, "concludes economist at Goldman Sachs.

kastism
Rank: Chile Forum Full Member
Posts: 25
Joined: Thu Aug 19, 2010 1:18 pm

Re: bullish on Chile?

Post by kastism » Mon Oct 11, 2010 12:56 pm

Finally a pullback?

ECH is currently forming a bear flag on the daily chart after breaking below a key trendline and retesting the 20 day moving average and another trendline. Keep an eye on it, may present a good opportunity to buy on a dip. I will be looking to scoop some up on a pierce of the 50 day ma myself.

User avatar
araucaniax
Rank: Chile Forum Citizen
Posts: 166
Joined: Sat Oct 30, 2010 9:59 pm
Location: Camino a la sabiduria de los idiotas, s/n, Chile
Contact:

Re: bullish on Chile?

Post by araucaniax » Mon Dec 20, 2010 2:27 pm

Look, these guys (I mean, the "ECH") sent me their "prospectus". I mean, they are telling me where they invest in Chile, see?...
ech.jpg
ECH
ech.jpg (40.27 KiB) Viewed 1468 times
The paper is "real" it seems, and is very good to start fire in my wood-stove! I mean that usually when shares are "good", they print their "prospectus" this way, on "real" paper that burns quite well.

And sometimes, when some really bulky "Annual Report" arrives -- the paper is some kind of plastic, or I don't know what else, anyways it won't burn. So it goes right to the garbage can.

-A
"Separate yourself from disturbance and face whatever appears before you." ~ Tiantong Hongzhi Chanshi, 1091-1157, (named "Chan Master Spacious Wisdom" by the Song emperor Gao Zong)

User avatar
araucaniax
Rank: Chile Forum Citizen
Posts: 166
Joined: Sat Oct 30, 2010 9:59 pm
Location: Camino a la sabiduria de los idiotas, s/n, Chile
Contact:

Re: bullish on Chile?

Post by araucaniax » Mon Dec 20, 2010 2:32 pm

You just look how they're doing:
ech_today.JPG
ECH Today.
ech_today.JPG (4.5 KiB) Viewed 1465 times
Huh?... Quite well.

-A
"Separate yourself from disturbance and face whatever appears before you." ~ Tiantong Hongzhi Chanshi, 1091-1157, (named "Chan Master Spacious Wisdom" by the Song emperor Gao Zong)

User avatar
greg~judy
Rank: Chile Forum Citizen
Posts: 2973
Joined: Wed Jan 27, 2010 2:00 pm
Location: citoyens du(h) monde

Re: bullish on Chile?

Post by greg~judy » Mon Dec 20, 2010 2:43 pm

RuneTheChookcha wrote:http://chart.finance.yahoo.com/c/5y/e/ech

Tomorrow, everyone, at 12:00, go and buy 10 shares of this. It will go up.

On Monday, everyone, at 12:00 -- sell!.. :alien:
Indeed you said you bought (~67?)
But we thought you sold on that Monday (~68?)
Did you follow your own advice... or continue to hold (~80?)
:?:
If so... will you sell now and buy more Gato :idea:
Things are not what they appear to be: nor are they otherwise.
--- Surangama Sutra
“If we want everything to stay as it is, everything will have to change."
--- Giuseppe Tomasi di Lamedusa

User avatar
araucaniax
Rank: Chile Forum Citizen
Posts: 166
Joined: Sat Oct 30, 2010 9:59 pm
Location: Camino a la sabiduria de los idiotas, s/n, Chile
Contact:

Re: bullish on Chile?

Post by araucaniax » Mon Dec 20, 2010 2:52 pm

Dear g~j:

"...Understand that not all here are posting honestly. In the end, it is just a forum and perhaps the info herein is not entirely accurate. DYODD..."

As it was stated by the Green Magister.

NIA

-A
"Separate yourself from disturbance and face whatever appears before you." ~ Tiantong Hongzhi Chanshi, 1091-1157, (named "Chan Master Spacious Wisdom" by the Song emperor Gao Zong)

User avatar
greg~judy
Rank: Chile Forum Citizen
Posts: 2973
Joined: Wed Jan 27, 2010 2:00 pm
Location: citoyens du(h) monde

Re: bullish on Chile?

Post by greg~judy » Fri Mar 02, 2012 7:53 pm

araucaniax wrote:Look, these guys (I mean, the "ECH") sent me their "prospectus". I mean, they are telling me where they invest in Chile, see?...

The paper is "real" it seems, and is very good to start fire in my wood-stove! I mean that usually when shares are "good", they print their "prospectus" this way, on "real" paper that burns quite well.

And sometimes, when some really bulky "Annual Report" arrives -- the paper is some kind of plastic, or I don't know what else, anyways it won't burn. So it goes right to the garbage can.

-A
Image
btw - 2+ years ago was 80+/-
but today, you will pay 66.85...

so look here araucaniax... look now... this is from The Street
perhaps you must buy more ECH - very cheap - asap...
:idea:
ECH: Chile ETF in Focus --- 03/02/12

NEW YORK (ETF Digest) -- Investors looking for exposure in the developing economies of Latin America would be remiss to not take advantage of the growth opportunities in Chile. At the moment there is only one ETF that provides exposure to this important market, the iShares MSCI Chile Index Fund(ECH).

Of course, when investors think about Chile, there's often just one thing that comes to mind: copper, and for a good reason. Chile is the world's largest supplier of copper, exporting anywhere from 30% to 40% of the copper in the world, and is also home to the largest reserves of copper on earth -- some 33%. To put that enormous quantity in perspective, the United States and Indonesia are tied for second in copper reserves, with just 7% apiece.

Indeed, Chile's massive copper reserves have played a pivotal role in the country's history for the last several decades. In 1971 the Chilean congress under socialist president Salvador Allende voted unanimously to nationalize the many copper mines throughout the country. These newly-appropriated state-owned enterprises would eventually become Codelco. After the military coup in 1973, when General Augusto Pinochet began selling off state-owned companies, the one company he absolutely refused to privatize was Codelco.

As the saying goes in Chile, "Codelco paga el sueldo de Chile." Translation: Codelco pays Chile's salary. In 2010 Codelco alone produced 1.7 million tons of copper, or 11% of the world total.

Despite this enormous contribution to Chile's economy as well as its exports, Codelco is conspicuous in its absence from ECH's holdings. It is not only the largest company in Chile by revenues with more than US$17 billion in 2010, its separate divisions accounted for a staggering US$10.7 billion more (Chuquicamata: $5.2 billion, Teniente: $3.2 billion Radomiro: $2.2 billion). This is to say, Codelco and its various subsidiaries had revenues in excess of $27 billion in 2010, more than double the number two Chilean company Cencosud ($13 billion), and more than four times ECH's number one holding at 10.3%, Copec, with a relatively meager $7 billion in revenues.

Now this is by no means some egregious oversight on iShares' part. Rather, there is no way to buy shares of Codelco because it is not listed on any stock exchange. In spite of all the pro-market liberalization in Chile, it's been a state-owned company since it was nationalized in 1971. This is a rare exception in Chile, a country that, perhaps more than any other in Latin America, has embraced neoliberal economics with open arms, where even ports, highways, state pensions, and public schools are privatized.

So, in short, assumptions can be dangerous. Chile is known the world over as a huge producer of copper, but you wouldn't know it from looking over ECH's holdings: 20% in utilities, 17% in financial services, and 10% in basic materials (which includes mining). A true reflection of the Chilean economy would almost certainly place mining firmly in first place.

This isn't to say that ECH doesn't provide exposure at all, obviously a great deal of that mining money is getting spent within the country, but it's certainly less direct than a pure copper play like JJC, which is designed to reflect the performance on copper futures contracts.
ech vs. jjc.gif
ech vs. jjc.gif (26.97 KiB) Viewed 1351 times
btw - g~j hold no ech - nor do we intend to take a position
Things are not what they appear to be: nor are they otherwise.
--- Surangama Sutra
“If we want everything to stay as it is, everything will have to change."
--- Giuseppe Tomasi di Lamedusa

User avatar
greg~judy
Rank: Chile Forum Citizen
Posts: 2973
Joined: Wed Jan 27, 2010 2:00 pm
Location: citoyens du(h) monde

Re: bullish on Chile?

Post by greg~judy » Sun Mar 11, 2012 8:18 pm

RuneTheChookcha wrote:Bought <some> ECH at 67.20 - (on 20 aug. 2010)

:alien:
Image

Image

look Rune...
today 66.64 - same, same after 19 months?
do you still hold that "one share"?

but listen, Rune...
but some perky pundits are still bullish on ech...?
caveat emptor, perhaps...!
:|
Lately people have been asking me, “Where can I still invest? Did I miss the emerging market move?” My answer in one word: Chile. This Latin American country has some of the best growth potential over the next 18 months, and is a great way for traders to play the commodity market.

Traders can trade Chile here in the U.S. via the iShares MSCI Chile Investable Market Index Fund (ECH). This ETF seeks to correspond to the price and yield performance, before fees and expenses, of the MSCI Chile Investable Market Index.

The fund invests at least 90% of its assets in the securities of the underlying index or in depositary receipts representing securities in its underlying index. The underlying index is a free float-adjusted market capitalization index that is designed to measure broad-based equity market performance in Chile. The fund is non-diversified.

Chile is also a great way for traders to gain exposure to copper, as the country is the world’s largest producer of this key industrial commodity. It exports 30% to 40% of the world’s copper and is considered to have the largest reserves on the planet.

The Chileans are looking to make the most of these reserves, too. According to Minister of Mining Hernan de Solminihac, mining companies are investing $91 billion over the next eight years. This is expected to increase cooper production nearly 50% over the next decade.

Some analysts are concerned market demand won't absorb the new supply, and that copper prices will weaken.

That may happen, but the investments are a response to copper consumption demand from China and India, which Chile hopes will keep buying enough copper to let it increase its annual national production rate 44% to 7.5 million tons by 2022 from a projected 5.2 million tons this year. At the moment, there are good reasons to believe that these growing nations will buy all the copper that Chile can produce.
Things are not what they appear to be: nor are they otherwise.
--- Surangama Sutra
“If we want everything to stay as it is, everything will have to change."
--- Giuseppe Tomasi di Lamedusa

User avatar
greg~judy
Rank: Chile Forum Citizen
Posts: 2973
Joined: Wed Jan 27, 2010 2:00 pm
Location: citoyens du(h) monde

Re: of-copper-and-death-crosses-chile-etf-gets-smoked

Post by greg~judy » Tue Jun 11, 2013 7:21 pm

RuneTheChookcha wrote:Bought <some> ECH at 67.20 <on 20 Aug 2010...>

:alien:
~
dearest rune...
do you still hold that <one> share of ech...?
:alien:
Another victim of declining commodities/rising interest rates/strong U.S. dollar trade is the iShares MSCI Chile Capped Investable Market Index Fund (NYSE: ECH ). While the ETF has since modestly bounced back, it touched a new 52-week low at $53.77 earlier Tuesday. If ECH closes below $54.55 today, it will be the first time it has committed that offense since the fourth quarter of 2011. ECH has not notched consecutive closes in the low $50s since October 2011.

A big of the Chile ETF's problem is the country's status as the world's largest copper producer, which in turns gives one of Latin America's more advanced economies significant leverage to China's commodities demand, or lack thereof. That clearly has been bad news lately for ECH, although the ETF is not particularly heavy on materials stocks . In fact, utilities, financials and consumer staples all receive larger weights in ECH than do materials names.

Making ECH all the more vulnerable to further downside is the ETF's 17.3 percent allocation to financials, a group that includes Banco de Chile (NYSE: BCH ) and CorpBanca (NYSE: BCA ).

Combined, those stocks represent just 6.5 percent of the ETF's weight, but they are showing ominous signals. Banco de Chile recently committed the offense known as in the world of technical analysis. That is when a shorter term moving average, such as the 50-day moving average, crosses below a longer term moving average, such as the 200-day line.

As Trade With Pete noted , CorpBanca has committed the same offense. Then there is the bearish head and shoulders formation in Banco Santander Chile (NYSE: BSAC ), 4.5 percent of ECH's weight.

ECH itself is close to a death cross . The Chile ETF is down 13.3 percent in the past month, a performance that is slightly worse than that of EWZ, the comparable Brazil ETF. Since May 1, investors have pulled nearly $30 million from ECH.

Picking a bottom in ECH could prove tricky given the ETF's volatile nature and track record of previous large declines in condensed periods of time. ECH is only modestly less volatile than EWZ with a three-year standard deviation of 24.9 percent compared to 26.5 percent for EWZ, according to iShares data .

Additionally, when ECH experiences multi-week declines, those are often followed by more declines. For example, the ETF plunged 23.5 percent over five weeks from July 1 to August 8, 2011. That was followed by a bounce then a 22 percent decline during September of that year. In fact, ECH's current tailspin is its third four to six-week double-digit decline since the fourth quarter of 2011.
:|
Things are not what they appear to be: nor are they otherwise.
--- Surangama Sutra
“If we want everything to stay as it is, everything will have to change."
--- Giuseppe Tomasi di Lamedusa

Post Reply