iShares MSCI Chile ETF

The Chilean peso gained against the US dollar on February 12 on the back of the unchanged monetary policy by its central bank and a surge in commodities.

Chile had been known as the best-managed economy in Latin America—until recently.

Investor sentiment with respect to Latin American economies has definitely been changing since the beginning of the year.

As the third-largest economy in Latin America, Colombia is expected to recover from its subdued growth of ~2% in 2016—its lowest figure since 2009.

Looking at copper import data, Chinese copper demand is not as weak as many are expecting.

Chile’s economy is highly dependent on copper mining activities. The recent long strike at BHP Billiton’s Escondida copper mine continues to impact Chile.

Copper prices have shown strength in the last few weeks. Copper started 2017 on a positive note amid supply-side concerns.

Chile’s economy grew 0.1% on a year-over-year basis in 1Q17, lower than the 0.5% expansion in 1Q16.

Copper’s story has essentially been a supply-side-driven deficit. We’ve seen significant supply disruptions this year.

India’s equity markets are soaring so far in 2017, pushing valuations above their long-term averages. India’s economy is scoring well due to high GDP growth and government reforms.

Latin American markets were trading higher on August 8—taking cues from a rise in commodity and crude prices globally.

Colombia’s central bank increased the benchmark interest rates for the 11th consecutive meeting by 25 basis points to bring the rate to 7.8%.

In many Latin American (ILF) (ECH) countries, higher growth and development have been accompanied by loss of competitiveness and a decline in productivity.

Latin American markets were trading higher on July 9—taking cues from other emerging markets. Brazil’s inflation rate was released lower at 8.8% in June.

The Latin American (ILF) (EWW) economy contracted in the second half of 2015. The fourth quarter registered the biggest fall in six years.

World Bank data reveal that since 2011, more than 60 million people in Latin America have opened bank and mobile money accounts.

Statista data show that the mobile penetration rate in Latin America reached a new high of about 126% in 2015.

Changing demographics in Latin America are driving innovations. Young people, which account for 25% of the total population, are more likely to accept innovation.

The banking sector in Chile got a boost as Banco Santander Chile (BSAC) and Banco De Chile (BCH) rose by more than 1% on June 17.

In May, China imported 430,000 metric tons of unwrought copper and copper products. Although imports fell 4.4%, they have risen more than 18% YoY.

China’s copper imports seem to defy any slowdown fears in the country.

The Chilean peso gave away losses against the US dollar on February 8, 2016. Inflation rates increased beyond expected levels in January.

The Chilean peso depreciated against the US dollar on January 29, 2016, as reports indicated that copper production fell 5.5% in December 2015.

Glencore (GLNCY) is among some of the most diversified natural resources (GNR) companies. Its operations span around the world.

On September 25, spot copper closed at $5,098 per metric ton on the London Metals Exchange. Copper prices had hit their six-year closing low of $4,888 per MT on August 24.

Most analysts have long-term positive views on copper. Copper does not face massive overcapacity like iron ore and steel.

Any variation in copper demand or supply directly affects the value of the Chilean peso against the US dollar.

Copper prices are testing their six-year lows. Copper miners such as Freeport-McMoRan and BHP Billiton are now rethinking their business plans to tackle the low commodity price scenario.

In the last four months of 2014, China’s refined copper production averaged more than 700,000 tons. This sent inventory surging.

According to the World Bureau of Metal Statistics, Peru’s refined copper production declined in the first three months of the current year.

Peru’s refined copper production declined over the last few years. Peru was the world’s second largest copper producer in 2007. Currently, it’s ranked third.

On a year-over-year basis, Chilean refined copper production fell by more than 1%. Incessant rains causing flooding are behind the decline in February’s copper production.