Chilean IPSA Slides 1.5% as SQM Rout Deepens on Tianqi Stake Sale

Chile’s S&P IPSA index fell 1.53% on Thursday to 11,251.62, extending a two-day selloff that has erased roughly 375 points from the benchmark since it traded within striking distance of its all-time high earlier in the week.

The continued rout in lithium giant SQM—triggered by Chinese shareholder Tianqi Lithium’s announced plans to divest its stake—dragged the index lower for a second consecutive session, while the peso gave back ground against the dollar as commodity-linked currencies came under pressure from falling copper and global risk aversion.

Key Market Data — February 5, 2026

Performance Analysis

Thursday’s session was a continuation of the damage inflicted on Wednesday, when the IPSA plunged 1.58% to 11,425.88 after Tianqi Lithium disclosed plans to sell up to 3.57 million Class A shares of SQM—equivalent to 1.25% of the company’s total equity—through a filing with the Hong Kong stock exchange.

SQM’s B-series shares crashed 5.3% on Wednesday and continued falling on Thursday, losing an additional 3.8% in early trading, making it the worst performer on the IPSA for a second consecutive day.

The stock’s American Depositary Receipts fell 7.5% in New York on Wednesday, outpacing broader lithium sector weakness.

The selloff was compounded by profit-taking in Latam Airlines, which paradoxically fell despite reporting record 2025 net income of $1.46 billion—a 50% increase over the prior year and the highest in the carrier’s history.

Analysts described the move as a textbook “buy the rumor, sell the news” dynamic, noting that the stock had rallied 8.6% in the two weeks preceding the earnings release.

Jorge Tolosa, an equity trader at Vector Capital, observed that investors who had positioned ahead of the results were cashing in, creating downward pressure that amplified the broader market decline.

The peso, meanwhile, reversed part of its recent gains. After strengthening sharply to around 860 on Tuesday—driven by a powerful copper rebound to $6.03 per pound and geopolitical-driven precious metals demand—the USD/CLP rose 0.95% to 866.83 on Thursday as copper retreated to $5.72 per pound and risk appetite faded across emerging markets.

Despite the two-day pullback, the peso remains up roughly 10% over the past year and near its strongest levels since late 2024, supported by the structural tailwind of elevated copper revenues and an investment-friendly political outlook.

Key Drivers

The week’s volatility illustrated how company-specific events can amplify broader market moves. Tianqi’s divestment announcement was particularly sensitive given the Chinese firm’s fraught history with SQM, coming after it failed to block the strategic partnership between Codelco and SQM for lithium extraction at the Salar de Atacama.

The filing revealed that Tianqi had already quietly sold 748,490 Class B shares since December 26, 2025, and no longer holds any B-series stock—raising market speculation about a potential full exit from its 21.9% stake.

Some analysts noted, however, that a complete withdrawal could open the door to a new strategic partner potentially more aligned with the incoming Kast administration’s mining agenda.

The macro backdrop for Chilean equities remains broadly constructive despite this week’s correction. Copper, while down from its all-time high above $6.00 per pound, continues to trade near historically elevated levels at $5.72, supported by a global refined deficit estimated between 150,000 and 330,000 tonnes for 2026.

JP Morgan forecasts the metal will average approximately $12,075 per tonne for the year, with data center demand alone expected to absorb roughly 475,000 tonnes.

Cochilco has projected record average prices of $4.55 per pound for 2026, though the sharp intraday swings this week—copper surged nearly 5% on Tuesday before giving it all back—underscore the speculative froth that has characterized the market since copper broke through $12,000.

Monetary policy continues to tilt in favor of Chilean risk assets. The Central Bank held the MPR at 4.50% in January, but minutes released on February 4 revealed the board discussed moving toward the 4.25% neutral midpoint, reinforcing expectations for at least one more 25-basis-point cut in the first half of the year.

Inflation has cooperated, declining to 3.4% year-on-year in December—on track to reach the 3% target in Q1 2026—giving policymakers room to continue easing.

Technical Outlook

The IPSA’s two-day decline has brought the index down roughly 3.2% from its January 28 all-time high of 11,627.58, a pullback that technicians would consider healthy given the extreme overbought readings that had accumulated—weekly RSI above 79 and daily RSI in the low 70s.

The 11,055 level, which corresponds to the Ichimoku cloud boundary visible on the daily chart, represents the first significant technical support.

A breach of that zone would expose the 10,927 area. On the upside, reclaiming 11,425 would signal that the correction has run its course, with a new assault on the all-time high likely to follow.

For the USD/CLP, the pair remains in a well-defined downtrend on both daily and weekly timeframes despite Thursday’s bounce.

The daily RSI near 41 and weekly RSI near 34 suggest the peso’s rally may be approaching oversold territory on longer horizons, creating conditions for further short-term retracement.

Resistance at 873—the level from which the pair reversed on Monday—represents the key barrier for any sustained dollar recovery, while the 851–858 support zone marks the 52-week lows.

Analyst Perspectives

“We are seeing a correction that we attribute mainly to the broad market selloff during the session, after several weeks of strong performance.

The stock has returned about 8.6% in the last two weeks, well above the index,” said María Ignacia Montt, analyst at Credicorp Capital, referring to Latam Airlines.

She added that the pullback to around $28 per share creates an attractive entry point against the firm’s $30.50 price target.

Regarding the broader market, Emanoelle Santos of XTB Latam noted that Tuesday’s rally was fueled by “a favorable external shock for Chile, with a synchronized metals rebound that improved sentiment around terms of trade and commodity-linked earnings.”

The reversal on Wednesday and Thursday, she noted, reflected LatAm-wide profit-taking rather than a fundamental deterioration in Chile’s investment thesis.

Looking Ahead

Markets face a packed calendar in the coming sessions. U.S. nonfarm payrolls, originally expected this week, have been delayed, adding uncertainty to the dollar outlook.

Chile’s Central Bank meets again in late February, where a 25-basis-point cut to 4.25% is gaining consensus support following the dovish January minutes.

The SQM situation will continue to command attention as Tianqi’s divestment unfolds, particularly any signals about potential new strategic investors.

Copper’s trajectory post-Lunar New Year, as Chinese fabricators return to full activity, will be critical for both the IPSA’s mining constituents and the peso.

Further ahead, José Antonio Kast’s March 11 inauguration will mark the formal shift in economic policy that markets have been pricing in since his December election victory.

Chile’s equity market is navigating a classic consolidation after a historic rally—driven this week by stock-specific catalysts rather than any deterioration in the macro narrative. With copper structurally supported, rate cuts on the horizon, and political change weeks away, the pullback looks more like a pause than a turning point.

This is part of The Rio Times’ daily coverage of Chilean markets and Latin American financial news.

For context on regional markets, see Brazil’s Ibovespa for the same session.

Also tracking regional peers: Colombia’s COLCAP closed the same session.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error