By Carla Mozee
Chilean stocks dropped nearly 2% Monday, the first day of
trading after a massive earthquake left hundreds dead and
interrupted power supply in the world's largest copper-producing
country.
Chile's IPSA index fell 1.7% to 3,761, able to pare deeper
losses but still weighed by investor concerns about "a near-term
hit" to economic growth, said Win Thin, senior currency strategist
at Brown Brothers Harriman, in a note to clients.
The pullback arrived one session after the blue-chip index
closed at its highest level ever.
Trading on the country's exchange opened at its normally
scheduled time. The 8.8-magnitude earthquake hit about 230 miles
south of Santiago, and about 70 miles from the city of Concepcion
in the early morning hours of Feb. 27.
In the Chilean capital of Santiago, shares of market heavyweight
and pulp and paper provider Copec slumped 2.9%. Stock in air
carrier Lan Airlines (LFL) lost 2.1%, while shares of fertilizer
maker SQM (SQM) and Banco de Chile (BCH) each gave up 1%.
But "not all [stocks]," are moving lower, said Jack Dzierwa,
global strategist at U.S. Global Investors, noting that investors
have snapped up shares of construction firm Salfacorp and forestry
products company Masisa, as investors look for opportunities in the
third most expensive market for equities among emerging markets,
behind Taiwan and India
Salfacorp shares rose 4.9%, Masisa shares gained 3% and
construction-services provider Besalco jumped 7.6%.
In New York, the Bank of New York Mellon's index tracking
U.S.-listed shares of Chilean companies (16899W19) fell 1.1%.
Among exchange-traded funds, the iShares MSCI Chile Investable
Market Index Fund (ECH) fell 1.7%.
Meanwhile, the country's currency rose against the U.S. dollar
as copper prices surged, lifted after some mining operations in
Chile were halted because of the earthquake. Copper prices had been
up more than 6%, but recently rose as much 2.1% to $3.35 a
pound.
The currency recently traded at 523.25 pesos per greenback,
compared with Friday's close at 529.80 pesos.
Chilean mining giant Corporacion Nacional del Cobre de Chile --
better known as Codelco -- said it will use plants in northern
Chile to make up for the disruptions. The bulk of mining activity
is conducted in the northern part of the Andean nation, away from
the center-south portion of the country.
Codelco is not publicly listed.
The peso is poised to post further gains, wrote Thin, in part
because the government is likely to tap savings from a fund to pay
for reconstruction efforts. The funds are kept in dollars, and will
be needed to be converted into pesos for rebuilding efforts.
"Furthermore, the price of copper has moved higher after the
earthquake on supply concerns, which should act as a positive terms
of trade effect that boosts the peso exchange rate," he wrote.