Boric’s victory in the Chilean presidential elections calls into question the flow of investments by Spanish companies in the Andean country. It is the usual movement of national companies in Ibero-America: every time a populist government comes to power, the commitment to that country falls.
Thus, the Chilean elections were a date marked in red on the calendar by the Spanish companies present there. Chile represents one of the last bastions for investment in the area; an oasis in the region where the strategic positions of internationalized Spanish companies were secure, at least until now.
“Chile has historically been the most stable country among the Latin American countries, with stronger, more credible institutions that made it more like a developed than an emerging country.
For this reason, it was one of the favorites among investors ”, explains the consultant in the area of economic and market analysis of AFI, NereidaGonzález.
You just have to take a look at the gross investment statistics for Spanish companies in Chile in recent years. Since 2014, Spanish companies have placed more than 12,000 million euros in gross investment in Chile. In the year before the pandemic, investments doubled those of 2018, with movements that exceeded 750 million euros. An ascent that has slowed Covid-19, with just 57 million euros of penetration from January to September of this year. In total, in 2019 Spanish companies had more than 15,000 million invested in Chile, according to data from the Secretary of State for Commerce.
The presence of Spanish companies there is not insignificant, with some of the largest capitalized from the Ibex such as Ferrovial and BBVA. But also Caixabank, Santander, Mapfre, Endesa or Telefónica, as well as up to several hundred firms from all sectors. In fact, Chile had become a refuge for many, as has happened with Repsol, which after the expropriation of YPF in Argentina, has chosen the Andean country to locate its renewables business.
The truth is that the rise of the ultra-left in Latin America has led to a twist in the international strategy of Spanish multinationals. It is there that they became multinationals thirty years ago, but the political instability unleashed in recent times has caused Spanish companies to seek opportunities in other continents. Telefónica’s divestment strategy has been well known in a continent that just a decade ago reported half of its income.
In any case, the AFI expert believes that it is still too early to assess whether there will be a return on investments, “although the development of yesterday’s market session, with falls in the Chilean equity market of around 3% or the The depreciation of the peso against the dollar by around 2% suggests some investor nervousness. ” For González “it is still necessary to know who will form the government’s economic team, which is key to the investment climate, but we could say that social discontent could be reduced if Boric fulfills its reformist agenda in this regard.
In any case, the blow could also affect exports. Latin America continues to fall in the classification of attractive countries to export prepared by the Association of Internationalized Industrial Companies (Amec), there is no country in the region among the top twenty in the world. In fact, Chile falls from position 15 to 22. «The pandemic, as in all regions of the world, has greatly affected the Latin American continent, but it is also that, in Latin America, the risk of recontagion is very high, since 50 % of the Latino population has not yet been vaccinated. As for Chile, the ranking measures 50 indicators and Chile, with relatively low growth rates, occupies this position as a result of all these indicators compared to the other more attractive markets. However, it is in the Top 40 ”, explains the CEO of Amec, Joan Tristany.