| SANTIAGO, April 17
SANTIAGO, April 17 Chile's stock market had its
best quarter of growth since the 1990s in the first three months
of 2017, with traders and analysts citing expectations of a
return to a conservative, business-friendly government as the
The IPSA has risen around 17 percent year to date.
Although the curve has flattened a little in April, the
first-quarter performance was its best since 1999.
Emerging markets equities in general had a strong quarter,
boosted by hopes about Chinese economic stabilization and
possible future U.S. infrastructure spending.
But Chile also benefited from significant tail winds related
to expectations of political change, analysts and traders said.
"The trigger (for the rise) is an improvement in long-term
expectations, as a result of eventual political change likely
after November's elections," said Matias Repetto, manager of
trading firm BTG Pactual Chile.
Billionaire businessman Sebastian Pinera, a former
conservative president, is the frontrunner in polls to win
November's presidential election, with the incumbent center-left
government deeply divided.
A fall in the price of copper has coincided with the
administration of President Michelle Bachelet, dragging on
investment and growth in the world's No.1 copper exporter.
Opposition leaders have criticized Bachelet's tax and labor
reforms for exacerbating the situation, and Pinera has pledged
to modify her reforms and do more to spur flagging investment.
"Expectations of a change of the policy cycle in Chile
toward the center could revive investment and diminish
regulatory risk in some sectors," analysts at BICE said.
Chile's powerful local pension funds - known as AFPs -
increased their exposure to domestic stocks to 8.7 percent of
overall investment in March, the highest level since September
2014, according to the pensions regulator.
Mutual funds are also showing signs of returning to the
local equities market, reversing a recent trend toward fixed
income and external investment. In March they were net buyers of
some $130 million worth of local shares, the highest amount in
six years, industry figures showed.
A recovery in copper in 2017 and low interest rates that
make fixed income investment less attractive have also
contributed to the stock market boom.
Cost-cutting programs and increasing geographical
diversification among Chile's larger listed companies have also
made their shares more appealing, especially as Brazil's and
Argentina's economies recover, analysts said.
The stocks most named by analysts as expected to benefit in
the medium-term include energy group Enel Americas,
retailers Cencosud and Falabella, IT firm
Sonda and bottler Embotelladora Andina.
(Reporting by Felipe Iturrieta, Writing by Rosalba O'Brien;
Editing by Dan Grebler)