The Chilean stock market falls by more than 8% and the country risk increases after the election result

The Chilean stock exchange loses more than 8% and the Chilean peso is devalued by 2.33% Monday afternoon, cutting a little the losses recorded at the start of the wheel. The market retreats after the shocking election in which the the ruling center-right coalition failed to secure a third critical of the seats in the constituent elections.

In accordance with the Chilean Credit Default Swap (CDS, a financial instrument that measures the risk of default), traded in dollars for a period of five years, reached 58.58 points, a jump of 8.55% and its highest level since early April.

After the poor performance of the ruling party and the progress of the independent and left sectors in the weekend’s elections, investors are reducing their positions in Chilean assets.

After having read the results of the Constitutional Convention, Chilean market analysts began to envision a complex day for the strengths of the trans-Andean country.

And so it was, early in the morning, dollar transactions reflect a $ 20 increase in the exchange rate. Later, there was the resounding fall of IPSA, the main Chilean stock index that brings together the 30 largest companies listed on this market, recording its worst day since March 2020 to date.

The strongest declines are observed in the basic services sector: Grupo Security gives up 8.76%, Viña Concha y Toro with a decrease of 6.67), Sonda with a loss of 6.62%, Aguas Andinas is down 4 , 98% and Entel Chili with a decrease of 4.98%.

The sharp decline in the markets follows himhe historic elections in which Chileans punished political parties and they decided that the new Constitution is drawn up by a convention with a strong presence of independents.

The ruling party -more in favor of maintaining the same economic model, with a subsidiary State in the provision of basic services- he is the big loser, good did not get the third of the 155 seats he needed to influence the drafting of the new text which will replace the current one, in force since the military dictatorship of Augusto Pinochet between 1973 and 1990.

How the week will go in Latin America

This week’s data employment in Mexico in the first quarter of the yearHello the monthly estimator of economic activity in Argentina corresponding to March, which will be used in advance for the calculation of quarterly GDP.

The region is keenly aware of developments in inflation and a possible rate hike to contain it in the United States, IE Latam Observatory director Germán Ríos told EFE.

Regarding employment data in Mexico, Ríos predicts it will be good thanks to the recovery in the United States, while in Argentina, less positive figures are expected due to restrictions imposed to contain the pandemic.

Another key to the week is seeing how the markets react to this weekend’s constituent elections in Chile.

Here are the economic keys that will mark the week in Latin America: MONDAY 17 The Mexican Institute of Statistics publishes the National Survey on Occupation and Employment for the first quarter of 2021.

WEDNESDAY 19 The Argentine Statistical Institute publishes trade figures for last April.

THURSDAY 20 The Argentine Statistical Institute publishes the monthly estimate of economic activity corresponding to last March, which will be used in advance to calculate the gross domestic product, on a quarterly basis.