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The debate around the fourth withdrawal of the AFPs stands out as the main factor of uncertainty for the stock market and the peso. The future of the red metal will depend on how the economic crisis unfolds in China.

Volatility in the stock market has been more present than ever before the next presidential elections and amid inflationary pressures for a possible fourth withdrawal from the AFPs. For this reason, analysts expect the end of 2021 to be negative, as in the last four years.

Yesterday, the main index of the local market, S&P IPSA, ended the session with a fall of 1.07%, at 4,101 points. With this, it accumulates a 1.82% decline so far in 2021, aiming to mark its fourth year down.

Banchile Inversiones’ studies manager, Javier Pizarro, said in a report that the rate hike will continue to cause a negative scenario for Chilean assets.

“We maintain our view that the IPSA will fluctuate sideways with high volatility in a range between 4,200 and 5,100 points,” he said.

Meanwhile, the investment strategist at Acciona Capital, Fernando Montalva, indicates that, although the market has already incorporated a more pessimistic scenario due to the effects of a fourth withdrawal, the S&P IPSA could seek support between 3,600 and 3,800 points.

If the project is not approved, it would see “a relaxation in the stress of local assets and a strong increase in confidence and, therefore, in the appetite for risk”, which would push the IPSA towards the zone of between 4,500 and 4,600 points .

“Winning” companies

So far, the stocks most affected by uncertainty are Engie Energía Chile, with an annual drop of 44%; Parque Arauco lost 42% in the same period and Ripley fell 35%. While the winning papers of the year are Vapores (111%), CCU (32%) and SQM-B (29%).

The portfolio manager of local stocks of Zurich Chile Asset Management AGF, Andrés Galarce, maintains his preferences in sectors around banking and retail.

“Its valuations and yields associated with dividends and earnings prospects look attractive for the remainder of 2021 and 2022, supported by the higher inflationary prospects in an environment where portfolio risk remains highly controlled -associated with withdrawals of funds. pension plans-, together with the strong control of expenses supported by digitization and less use of branches ”, he explains.

He states that the retail sector, mainly supermarkets, “will continue to show stable sales behavior and solid margins in the current inflationary environment, in a context of fiscal stimulus and recovery in the labor market.”

Dollar and copper

At the currency level, the dollar in Chile fell by $ 2.25 yesterday to $ 823. However, during the first operations it exceeded the $ 830 barrier, which marks a volatile trend that could continue until the end of anus.

The US currency has ignored the latest movements in copper, which is at US $ 4.25 a pound on the London Metal Exchange, with a gain of 21% so far this year.

Considering that the currency has risen 17% this year, leading the Chilean peso to rank as the third worst performing currency among emerging markets, Montalva assures that it could remain between current levels and $ 850.

From Bice Inversiones they are more optimistic, indicating that there is room for the currency to be close to $ 780.

“This will be highly subject to local uncertainty factors, such as new withdrawals of funds or the results of the next elections. In addition, recently the international scene has also become less risk-taking, with a stronger dollar against other currencies in a generalized way ”, explains the chief economist of Bice Inversiones, Marco Correa.

Despite its recovery, the market highlights that there are still several downward pressures that could drive copper to lower levels.

“The downward pressures on copper come mainly from China. The country is in the midst of an energy crisis caused by high coal prices and the country’s environmental demands, in addition to the difficult situation in which the real estate sector finds itself due to Evergrande ”, says the head of studies at XTB Latam , Manuel Ugalde.

“We believe that the price of copper will be close to US $ 4 a pound in a more optimistic scenario. In a more pessimistic one we see it closer to US $ 3.6 ”, he adds.

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