Chilean stocks closed at a new 13-month low on Friday, after news of a US economic stimulus package failed to rally support. Chile's all-market IGPA index fell 1.02 percent to 12,173.18 points, bringing its loss for 2006 to 13.5 percent, while the blue chip IPSA index declined 1.22 percent to 2,555.66 points.
Global markets slumped after a stimulus package outlined by President George W. Bush raised doubts about how much of a boost it would give the economy. "A recession is looking more and more likely," said Alejandra Saldias, chief executive of mutual funds for Corpcapital. "Obviously what they're going to try to inject liquidity so the recession won't be so deep." Saldias said strong fundamentals were not protecting regional stocks from volatility related to worries about an impending US slowdown.
"There's not a single market that hasn't been affected. "The prices do not reflect what the companies are worth," she said. On the Santiago exchange, regional energy group Enersis erased early gains with a decline of 2.54 percent, while giant industrial conglomerate and wood pulp exporter Copec fell 1.91 percent. Leading iodine and lithium producer Soquimich led blue chip losses as its shares slumped 4.12 percent to 7,191 pesos a share.
Other declines included regional retailer Cencosud with a retreat if 3.48 percent to 1,750 pesos, and dominant air carrier LAN with a fall of 2.2 percent to 5,395 pesos. Next week markets will continue monitoring US economic data. "It's hard to say what will happen.
The market is so data dependent. New information may cause the market to react very badly or very well. I think it will be another roller-coaster ride," Saldias said. The peso slipped 0.08 percent to close at 476.10/476.60 per dollar, compared with 475.70/476.20 at Thursday's close.