May 12 (Bloomberg) -- Colbun SA and Parque Arauco SA were included in a list of preferred Chilean stocks at Banco Santander SA, which cited prospects of improved hydroelectric conditions and consumption growth.
Colbun, the country’s third-largest power producer by installed capacity, replaced larger rival Empresa Nacional de Electricidad SA, also known as Endesa Chile, in the list, while mall operator Parque Arauco replaced retailer Cencosud SA.
“We believe Colbun should benefit more in an event of normalization of hydro conditions in the second half of 2011,” analyst Francisco Errandonea wrote in a note to clients dated today. Cencosud has a “potential overhang risk stemming from the $2 billion capital increase approved by shareholders April 29,” he wrote.
Santander also likes Parque Arauco’s growth potential in Peru and Colombia. “It’s the only pure shopping-center play in the Andean region,” Errandonea wrote.
Parque Arauco rose 0.8 percent to 1,095 pesos at 11:32 a.m. New York time. Colbun fell 1.4 percent to 140.5 pesos after rising as much as 0.4 percent. Endesa slid 0.6 percent to 870.9 pesos and Cencosud fell 0.6 percent to 3,590 pesos.
Dry weather has limited hydroelectric generation in Chile, forcing producers to use more expensive fuels.
Soc. Quimica y Minera de Chile SA, SACI Falabella and Ripley Corp SA remain in the top picks list, and retail is Santander’s favorite sector in Chile, Errandonea wrote. The Chilean stock market can absorb an estimated $7 billion of planned equity offerings this year, he wrote.
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