Chilean Assets Ride Copper Boom And Conservative Turn As IPSA Hits New Record

The Chilean peso and Santiago’s stock market began December still riding a powerful rally built on record copper prices and growing expectations of a more market-friendly government.

In early Tuesday trading the dollar hovered around 929 pesos, little changed after Monday’s close, while the S&P CLX IPSA added 0.2% to 10,144 points, its fifth straight record and roughly 50% higher this year.

Investors are betting that December’s presidential runoff will cement a clear break with years of constitutional tinkering and heavy-handed regulation.

The first round left Communist contender Jeannette Jara facing a right-of-centre bloc led by José Antonio Kast, whose programme of tax stability, leaner state companies and looser capital controls has been warmly received on trading desks.

External conditions are unusually supportive. Copper has broken to fresh highs above $11,200 a tonne as Chilean mine output disappoints and Chinese smelters signal production cuts, delivering a rare terms-of-trade windfall.

With the U.S. Dollar Index drifting near 99 and Treasury yields hovering close to 4%, the peso has held firm even as other regional currencies wobble.

Domestic data are also helping. October’s IMACEC activity index beat forecasts with 2.2% year-on-year growth and, although third-quarter GDP dipped slightly versus the previous quarter, most houses still see full-year expansion.

The central bank’s policy rate stands at 4.75%, and swaps point to a cautious 25-basis-point cut at this month’s meeting rather than the faster easing many left-wing economists have demanded.

Beneath the index level, Monday’s session was led by gains in CUPRUM, SCHWAGER, MINERA, CMPC and QUINENCO, while SOCOVESA, HITES, ENTEL, RIPLEY and CGE posted the steepest declines.

Foreign interest remains strong: the main Chile equity ETF has seen sizeable inflows in recent weeks, and the closing auction once again showed heavy participation from offshore institutions.

Technically, USD/CLP has broken down from the 960 area and is now consolidating between 920 and 935 pesos, a range traders see as a platform for further peso strength if polls and copper stay supportive.

For now, Chile stands out as a rare case where orthodox policy hopes, solid earnings and commodity leverage are pulling in the same direction.