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Good and happy Thursday! Busy week for global markets. This Wednesday, the Federal Reserve of the United States (the Central Bank of this country) announced its largest increase in interest rates since 1994. Does this have collateral effects for Chile? Absolutely, and that’s what we’ll be talking about in this edition.

Before starting with what calls us, I want to invite you to share or join El Semanal, and El Semanal Exprés, so that our community continues to grow. Subscribe or share this newsletter.

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1- THE FED PUT ON THE GLOVES

“We will do everything possible to reduce inflation. It is very painful for people, but the crucial issue in our work is that people have confidence in our tools to reduce inflation”.

Historic climb. That was the explanation of US Federal Reserve Chairman Jerome Powell after announcing a 75 basis point hike in the benchmark rate, the biggest hike since 1994, and a clear sign of concern. there is about inflation.

This climb is not the end: Powell warned that another 75 basis point increase is likely, although he acknowledged that an increase of this magnitude is unusual. The market anticipates that the reference rate could reach 3.5% in December. The Fed’s decision left the benchmark rate between 1.5% and 1.75%.

The impact in Chile. Although the peso has rebounded against the dollar, the Fed’s rate hike is a medium to long-term pressure factor on the Chilean peso and the economy. This may be forcing the Central Bank of Chile to keep rates higher than the economy requires, to support the peso (exchange rate). Some economists say the time is approaching for the Central Bank to intervene in the foreign exchange market.

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of them

2- THE AFP TALK WITH THE GOVERNMENT

Source: UN Agency

What happened. The AFPs are meeting with the government to discuss the future pension reform. This is the second round of talks. This week (Wednesday and Friday tomorrow) Provida and Cuprum have been called up, according to The third. The talks are the result of a request from its North American parent companies, Metlife and Principal, to Chairman Gabriel Boric during his US tour.

  • What is under discussion. Its role in the future system. Both the text of the new Constitution and what the government has slipped in leave a role open to the private sector, but there are no definitions. This is a delicate question, because beyond the political edge, there is a legal edge with potentially millionaire costs for the State: 5 of the 7 AFPs (Cuprum, Capital, Habitat, Provida and Plan Vital) are controlled by foreign capital. At least 3 of them told La Moneda that they would be ready to go to international courts to defend their rights.

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A message from VanTrust Capital

For more information, click on the image

ESG and post-pandemic recovery.

Two and a half years after the first confirmed case of Covid-19, businesses are beginning to recover. Given the international context, they have not only been confronted with a new way of working, but also – in some cases under pressure – with respecting environmental, social and governance criteria, as shown in this graph which indicates three indices of compliance ESG, with SRI being the most important. demanding, followed by ESG leader and ESG universal.

  • ESG criteria refer to the environmental, social and corporate governance factors that are considered when investing in a company. Although their origin dates back several decades, in recent years they have become the benchmark for socially responsible investing (SRI).

  • Patricio Nazal, president of Vantrust Capital, explained that “como compañía siempre apostamos por invertir en las empresas que optaron por el cumplimiento de criterios extra financiers por que tendrían una recovery mayor y más rápida post pandemic, en la medida que más stricttos fueran con el cumplimiento of these”.

  • As a backdrop, Vantrust had what was made visible by a Harvard University study that shows that between 2010 and 2020, the stocks of companies that addressed these issues came to outperform. by 45% compared to those who did not, and By choosing companies with above-average ESG indicators, an investor would have avoided 90% of company bankruptcies in the United States since 2008, a situation which according to Nazal “is a trend that is beginning to become visible in Chile, since these companies benefit from a premium (prize) for sustainability”.

  • All information is available on this link or by clicking on the image.


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3- ENAP + PETROBRAS CHILE = COMPETITION FOR COPEC?

Petrobras Chile for sale, but the question is who would buy it. Southern Cross, the private equity fund led by Raúl Sotomayor and Argentinian Norberto Morita, has hired Bank of America and Scotiabank to find buyers. In 2021, it generated revenue of US$1,840 million and operating profit of US$76 million. Petrobras is the third player in local industry, which Copec dominates, with 15% of the market. Its retail gas station business holds 22% of the market.

  • ENAP, potential candidate for the purchase. Sotomayor and Norita aim to double the initial investment in 5 years. The asking price for Petrobras Chile is said to be $900 million, almost double what they paid in 2017. In the market, they believe that a possible interested party is the state oil company. Sources close to the board and who know the company intimately say this is something the company would seriously consider.

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4- WITHOUT TACOS OR LINKS, EXPRESS

– Women in power. 59% of Chilean businesses are family owned and 58% are run by women. It was revealed by a study carried out in June by SumUp Chile, a European fintech for means of payment that aims to develop in our country in the SME market. 47% comment that the business is run from home, a reality that allows them to reconcile household chores with those of the business.

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–Some analyst readings on the Summit of the Americas. It has become clear that the United States is no longer the power it used to be in the region. Argentinian journalist and editor Iván Schargrodsky argues that less dependence on the US market means more room for autonomy. But he warns that since China replaced him as the biggest trading partner things have changed, but not for the better. China encourages the export of goods not value-added products. The origin of finance and investment has also changed, particularly in regulated or natural resource-based sectors.

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– Inflation is rising all over the world, including in Europe. But there are exceptions like Bolivia, Japan and Switzerland. In Switzerland, inflation is 2.9% per year, while in Europe it exceeds 8%. As did? The explanation, in This thread from Twitter by Spanish economist Eduardo Garzón, professor at the Autonomous University of Madrid and Johns Hopkins University.

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5- EL MOSTRADOR DIALOGUES: THE REBELLION AGAINST ESG REGULATIONS

As I told you in Sunday’s edition, a growing number of entrepreneurs, managers, investment funds and companies on Wall Street, in Europe and even in Chile, they are rebelling against regulations that force them to include environmental, social and corporate governance (ESG) factors in their investment decisions.

  • In December 2021, the Financial Market Commission (CMF) issued regulations that integrate sustainability and corporate governance disclosure requirements into company annual reports, in line with international standards.

Diálogos de El Mostrador focuses on debate and we want to invite you to participate. It will take place next Friday 17 at 8:30 a.m. and will deal with “the role of business as a legitimate actor in society and the new definitions of profitability, which now include environmental, social and governance obligations of company or in ESG matters”. “

  • The guests will be Gabriela Salvador, executive director and co-founder of VanTrust Capital, and Gerardo Varela, lawyer, columnist, former Minister of State and specialist in corporate governance issues. If you want to participate, click here or on the image


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Here we are in this edition. Before I wrap up, I want to share a quote from Russian writer Fyodor Dostoyevsky that came to mind this week, while reading some of the discussions on Twitter about inflation, price controls and interest rates :

My intention is not to offend, but to emphasize the importance of listening and dialogue. Canceling the culture does no one any good.

Well, sayonara for today. And remember that if you have any comments or information to share with us, write to me at ivan@elmostrador.cl or on my networks.


#Fed #strikes #peso #shakes

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