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The coronavirus has put the world economy in check. Just in early April, the head of the International Monetary Fund (IMF), Kristalina Georgieva said that the global recession due to the coronavirus was already “much worse” than the 2009 financial crisis, a situation from which Chile has not been exempt, with a sharp rise in the dollar and low prices for copper, the country’s main export product.
However, on this day, the Santiago Stock Exchange posted its best month since May 2009, a situation influenced by the aggressive injection of liquidity from central banks around the world, which, led by the Federal Reserve, managed to stabilize financial conditions, stated this Wednesday the newspaper Pulse. Thus, the IPSA returned to 4,000 points and has recovered 53.7% of what was lost during the year.
Along these lines, the director of portfolio and strategy of Credicorp Capital AGF, Klaus Kaempfe, explained that “the market has reacted well to the measures of the FED, of the governments and to the decrease in new cases (of coronavirus). This is the clear example of long-term investment. Finally, timming by selling in a panic generates permanent losses. “
Dollar falls back; copper rebound
On the other hand, the revival of the Chinese economy boosted copper prices, which in turn translated into a significant drop in the dollar, which fell $ 18.7, reaching $ 835.2 this day. Meanwhile, copper advanced 8% in April, its biggest one-month rise since November 2016.
According to a report by Goldman Sachs, “Latin American assets have been the most affected and now stands out as the most undervalued region of emerging economies in equities, currencies and credit in relation to historical ranges (…) Given our more optimistic forecasts for raw materials in the second half of the year and low valuations, we expect Latin American assets to perform better in six months. “
Cencosud, the big winner
The global paralysis of the economy translated into a greater benefit for companies linked to consumption and technology, considered sectors with better capacity to face the pandemic.
In that sense, the big winner is Cencosud, who recovered 96% of what he lost due to the increase in demand as a result of the quarantine. Colbún and Entel also recovered 78% and 70% respectively.
On this issue, JP Morgan noted in a report that “we believe that Chile has crossed all descending limits, even taking into account a structurally more fragile environment and the uncertainties generated by the (long) constitutional cycle. Furthermore, Chile is one of the emerging countries that can benefit the most from oil reduction, as it imports 100% of their needs. “
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