Falabella Falls in Chile as Investors Sell on Valuation

SACI Falabella, the retailer that is Chile’s largest listed company, fell the most in 18 months as foreign investors sold its shares in search of regional alternatives with lower valuations.

The stock retreated 3.5 percent to 5,437.5 pesos at the close in Santiago, the biggest drop since October 2011. The company was the worst performer on the benchmark Ipsa index, which fell 1.1 percent to its lowest level since Dec. 28.

“We are seeing lots of sales from foreign investors, which were among the most buyers in the stock’s recent surge,” Aldo Morales, an analyst at the brokerage unit of Bice Inversiones in Santiago, said in a telephone interview. “The local market doesn’t look very attractive from a multiples point of view so they seem to be moving elsewhere.”

Falabella has slid 4.4 percent over two days after posting an 8.8 percent rally in the previous 10 days, its longest winning streak since December 2009.

The company, which operates supermarkets, department stores, home improvement stores, banks and shopping malls in Chile, Argentina, Colombia and Peru, trades at 36 times its trailing earnings, compared with an average 32 for Latin American retailers, according to data compiled by Bloomberg.

Chile’s Ipsa index trades at 17 times its estimated earnings for the next 12 months, compared with 11 times for Brazil’s Bovespa, according to data compiled by Bloomberg.