On Charlie Rose, was talking about China.
Among the major exports of Chile is copper. SCCO Souther Copper is the ticker I usually use. What he said was rather interesting. China is now their largest trading parter, no longer the USA.
He spoke at some length about their trade, and it basically comes down to a lot of raw materials being locked up for China and some bidirectional trade in manufactures, along with Chile providing agricultural goods. He asserted a similar pattern was forming in other Latin American countries.
There was some time spent on the Daddy Bush proposed Americas Free Trade Zone that “we are still waiting for”. It was also discussed that Obama has basically ignored South America.
Why does this matter?
First off, it means we in the USA are increasingly irrelevant to Latin America. Neither as customer nor as supplier. This will make it harder for the USA to compete. Cars made in China and electric motors made in China will get first bite at the apple on Copper in Chile.
Second, it means that Latin America has a trading partner with a growth rate between 9 and 12% that has increasing quantities of cash and wants to buy.
OK, Latin American stocks get a Plus Rating, USA gets a Minus…
Not only are the regional Asian Tigers an indirect play on China, and not only is Australian mining an indirect play on China, but the whole of Latin America; agricultural goods to minerals to specialized manufactures. And through them, that implies the utilities, transports, and real estate as well.
And The Chart Says?
This chart compares two Chile funds with the S&P 500 ETF “SPY” and with two miners. SCCO does copper and SQM is a major lithium miner.
ECH - iShares Chile Fund CH - Closed end Chile Fund SPY - S&P 500 USA stocks ETF (benchmark) SCCO - Southern Copper (copper miner) SQM - Sociedad Qufmica y Minera de Chile S.A. (lithium miner) EWZ - Brazil ETF (Latin Benchmark)
Rising nicely lower left to upper right. Looks like a nice ride to me.
Sabastian impressed me as a very competent and centered manager, who happened to also be a politician. Someone who clearly understood the way things are, economically, and was going to manage his country for success.
Looks to me like a lot of things are pointing in the right direction for Chile.