Chile Stocks Plunge on U.S. Debt Concern, Retail Restrictions

Chilean stocks fell, sending the benchmark index to its biggest decline in five months, on concern about a deadlock in negotiations to raise the U.S. debt ceiling and speculation that local retailers may face new restrictions on making consumer loans.

The IPSA index fell 2.1 percent to 4,525.30 at 4:22 p.m. New York time, the steepest drop since Feb. 9.

“The discussions to raise the debt ceiling are having an effect here, and there’s the threat of restrictions on the interest rates that retailers will be allowed to charge,” Pablo Andalaft, deputy manager of investment strategy at Santiago- based brokerage Negocios & Valores SA, said in a phone interview today.

Chile’s government is considering changes to interest-rate limits as a way to bolster consumer protection after a credit scandal at retailer Empresas La Polar SA (LAPOLAR), Economy Minister Pablo Longueira said July 22. Representatives from local retailers and the government will hold discussions this week to announce measures within the next 60 days, Longueira said July 25, according to the Economy Ministry’s website.

Empresas Hites SA (HITES), a department store operator, fell 6 percent to 474.31 pesos, while SACI Falabella (FALAB), the country’s largest retailer by market value, retreated 3.9 percent to 4,545.7 pesos, the steepest fall in six weeks.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net.

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