Chile Stocks Eye Record; Earnings & Copper Boost, Growth at 2.7%

Chilean stocks approach record highs, driven by strong earnings and a surge in copper prices, with forecasts pointing to further growth.

By Bill Bullington

5/16, 10:20 EDT

Key Takeaway

  • Chilean stocks near record highs, IPSA index could reach 7,000-7,200 points driven by strong earnings and rising copper prices.
  • Economic growth forecast for Chile upgraded to 2.7% for 2024; interest rates cut from 11.25% to 6.5% to stimulate growth.
  • Global demand for copper, especially from the EV and renewable energy sectors, supports the bullish outlook for Chilean equities.

Chilean Stocks Near Peak

Chilean equities are experiencing a notable surge, with the IPSA stock index reaching an intraday high of 6757.07, closely following a record close at 6728.41. This performance is attributed to a robust economic backdrop and a significant rally in copper prices, which have historically been a critical factor for the Chilean market. Analysts from Credicorp Capital and Larrain Vial project the index could ascend to between 7,000 and 7,200 points in the forthcoming months, buoyed by strong earnings and an optimistic economic forecast. The Chilean economy's outlook has brightened, leading to an upward revision of the 2024 growth forecast to 2.7% from 2.5%.

Copper's Crucial Role

The rally in copper prices, alongside the appreciation of the Chilean peso and moderated inflation expectations, has been a key driver of the IPSA's performance. Analyst Rodrigo Godoy from Credicorp highlighted the potential for further, albeit moderate, appreciation of the stock market. This sentiment is echoed in the context of Vortex Metals Inc.'s strategic move to acquire up to an 80% interest in the Illapel copper project in Chile, signaling potential growth driven by the global demand for copper, especially in the energy transition sector.

Economic and Monetary Dynamics

Chile's proactive monetary easing, with interest rates cut from 11.25% to 6.5% over the past year, is set to bolster economic growth. Analyst Luis Ramos from Larrain Vial anticipates a solid recovery in economic activity for 2024 and 2025, primarily fueled by increased consumption. This domestic economic strategy aligns with the global copper market's expected growth, driven by the demand for electric vehicles (EVs) and renewable energy technologies, amidst a backdrop of supply shortages.

Street Views

  • Rodrigo Godoy, Credicorp Capital (Bullish on IPSA):

    "We estimate that the stock market has room for additional, albeit moderate, appreciation."

  • Luis Ramos, Larrain Vial (Bullish on Chilean economy and IPSA):

    "We expect a solid recovery in economic activity in 2024 and 2025, driven mainly by greater dynamism of consumption."