By Carla Mozee
Chilean stocks fell Monday in the first session 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 finished 1..2% lower at 3,782.04, able to
pare much 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. An 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 2.3%. Stock in air
carrier Lan Airlines (LFL) lost 1.6%, while shares of fertilizer
maker SQM (SQM) fell 0.6% and Banco de Chile (BCH) gave up
0.5%.
But "not all [stocks]," moved lower, said Jack Dzierwa, global
strategist at U.S. Global Investors, noting that investors 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 surged 6%, Masisa shares gained 6.3% and
construction-services provider Besalco jumped 8.2%.
In New York, the Bank of New York Mellon's index tracking
U.S.-listed shares of Chilean companies (16899W19) fell 1%. The
index tracks 12 issues.
Among exchange-traded funds, the iShares MSCI Chile Investable
Market Index Fund (ECH) closed down 1.4%.
Meanwhile, the country's currency rose against the U.S. dollar
as copper futures climbed, lifted after some mining operations in
Chile were halted because of the earthquake. Copper prices had
climbed the most in nearly a year before paring advances to end
2.1% higher at $3.35 a pound.
"The mining sector, situated mostly in the northern part of the
country, seems to have emerged relatively unscathed, except for
some power outages," said Daniel Kerner, Latin America analyst at
the Eurasia Group.
The currency 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 that was hardest hit by the
temblor.
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.