The local market celebrates its arrival in 2019. Since the end of December, the Santiago Stock Exchange has gained 14 days of profit, and to close this Thursday, IPSA – the main indicator of the local stock exchange – would be the highest upward trend in history.
The progress made in trade war negotiations, the diminishing fears of China's slowdown and the positive outlook on Latin American markets are the main factors explaining good performance.
In this higher risk appetite scenario in the world, IPSA accumulates a 7.72% gain over the 14 consecutive days up. In addition, it marks the biggest winning variant in February 1990. Measured in dollars, it is the third fastest growing index in the world. However, the rally is not enough to offset the decline last year.
For Pamela Auszenker, Deputy Director of Studies at Bci Corredor de Bolsa, an important part of the advance "is given by lower aversion to global risk, especially due to the drop in tensions between China and the US."
In addition, the stimulus measures announced by the Asian giant authorities have calmed the fear among investors about the slowdown in economic growth. The People's Bank of China injected more than $ 86 billion into the financial system to increase market liquidity and thus avoid a cash crisis. "In addition, ratings are still at attractive levels, and in the opinion that the Fed will be more cautious, this has been favorable to the stock markets in the region," Auszenker added.
The Latam effect
The good performance of the local stockbroker is also explained by positive prospects for Latin American markets. In this respect, Vector Capital Investment Strategies analyst Víctor Viera said the relaunch of the local stock market is explained by "the constant recommendation of major investment banks to increase their share in our region, especially Chile, is showing lower volatility and an economic projection of nearly 3.5% for the coming years. "
In fact, until this year, Latin America stock market returns are the highest on a global scale. In this respect, the Bank of America survey for January shows that 71% of consultant investors predict that shares in the region will increase in 2019, compared with 64% reported last month.