(Reuters) – Shares on Chile’s stock exchange are seen gaining 10 percent in 2015, more than double the pace this year, according to eight analysts surveyed by Reuters, as falling oil prices and a stronger dollar give a boost to power utilities and wine producers.
They expect the Santiago Stock Exchange’s blue-chip IPSA index to expand around 10 percent next year to 4,170 points, following a mild increase of 4.1 percent in 2014 and sharp 14 percent drop in 2013.
“The main drivers have to do with favorable international conditions for investment in stocks and better margins at many companies due to lower costs,” said Benjamin Sierra, analyst at Scotiabank in Santiago.
As Chile imports the vast majority of fossil fuels it consumes, a reduction in oil prices will help reduce costs and be a boon to electricity generators including Enersis, Endesa Chile, Colbun and ECL.
Rebounding water levels at reservoirs should also ease costs by allowing for cheaper increased hydroelectric power generation.
“We’re favoring companies with results that stand out. In that sense we’re overweight on the electric utilities sector,” said Francisca Manuschevich, research head at Credicorp Capital.
Meanwhile, a stronger dollar has made Chilean exports more competitive abroad, making them relatively more inexpensive. That is expected to lift wine exporters’ shares, including producer Concha y Toro and brewer and bottler CCU .
Analysts caution against buying in to companies that rely heavily on domestic demand, especially household consumption, considering soft economic growth.
The economy of the world’s top copper producer has been slowing for several quarters, hampered initially by cooling investment, most notably in the mining sector, with the slowdown compounded by falling household consumption.
They also recommend steering away from commodities-related firms amid slipping prices for raw materials. (Reporting by Felipe Iturrieta; Writing by Anthony Esposito; editing Richard Lough and Matthew Lewis)
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18 October 2014