Chile’s Ipsa index fell the most among major emerging-market benchmarks after the central bank cut its growth forecast amid mounting concern the country’s next president will raise corporate taxes and tighten regulations.
The gauge retreated 1.9 percent to 3,953.87 at the close of trading in Santiago, snapping a four-day advance. Retailer Cencosud SA contributed most to the decline. SACI Falabella was the most active by value, with 12 billion pesos of the department store operator’s shares changing hands.
Chile’s economy will expand 4 percent to 5 percent this year, down from a previous projection of growth ranging from 4.5 percent to 5.5 percent, according to the central bank’s quarterly monetary policy report released today. Former President Michelle Bachelet, whose platform includes raising corporate taxes, tightening regulations and boosting government spending, won a landslide in a primary yesterday and will be on the presidential ballot in November.
“We had speculation that growth would be slower, and now the central bank has confirmed that,” Alfredo Parra, an analyst at Santiago-based brokerage Euroamerica Corredores de Bolsa SA, said in a phone interview. “Also, with Bachelet we have signs of more regulation and people fear that will cut into companies’ profits.”
Bachelet, who led Chile from 2006 to 2010, garnered 73.1 percent of the vote, while Andres Velasco, her closest rival and a former finance minister, had 13 percent, according to the Electoral Service website. During her primary campaign, Bachelet promised to boost spending on education, paid for by a five-percentage-point increase in the corporate levy and a cut in the amount companies can put aside for future investment without paying tax.
Chile’s presidential election is Nov. 17. Bachelet will face Pablo Longueira, who won 51.4 percent of the vote in the ruling coalition’s primary.
Cencosud dropped 3.8 percent to 2,434.4 pesos. Falabella fell 1.8 percent to 5,571.2 pesos.