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Showing posts from March, 2009

Pinera to Run for President in Chile on Employment, Education

By Nathan Gill March 31 (Bloomberg) -- Chilean billionaire Sebastian Pinera will present his presidential campaign platform this week, highlighting his plans for boosting employment and improving education in South America’s fifth-biggest economy. Pinera, running as a candidate for the Alliance for Chile coalition, said his proposal would add 1 million jobs in five years, in comments to reporters today in Santiago. “We have a concrete plan to achieve two objectives: give jobs to Chileans and improve the education of our youth,” Pinera said, pledging to present his full program at the end of the week. The candidate, the world’s 701st-richest person according to Forbes magazine, said he would focus also on lowering crime rates. He declined to give details. “If we could also agree on a plan to reduce crime, we could turn this very difficult year into perhaps the most fertile year with the most achievements in our society.” Pinera lost the 2005 election to President Michelle Bachelet, wh…

Chile Stimulus Plan to Spur Job Growth, Velasco Says

By Nathan Gill March 31 (Bloomberg) -- Chilean government spending will help create jobs, Finance Minister Andres Velasco said today after the unemployment rate rose to a two-year high last month. The government’s $4 billion economic stimulus package and “solid and credible” institutions will allow Chile to limit the damage from the global financial crisis and add jobs to the economy, Velasco said at a conference in Santiago. “Every job lost in Chile worries us,” Velasco said to reporters after his speech. “This is why the government has come forward with measures at the right time, so that credit gets to small- and medium-size businesses, to families and creates jobs.” Chile’s unemployment rate rose to 8.5 percent in the three months through February, up from 8 percent in the three months through January, the National Statistics Institute said today. President Michelle Bachelet’s government on March 29 announced new steps to ease restrictions on lending to consumers and small busine…

Chileans Storm Pharmacies to Protest Price-Fixing on Medicine

By Nathan Gill and James Attwood March 27 (Bloomberg) -- Chileans stormed pharmacies and the government pledged a crackdown after the country’s second-biggest drugstore chain said it joined with rivals to raise prices of life-saving medicine.
Crowds gathered outside pharmacies in downtown Santiago, waving placards and shouting their opposition to high prices, according to images aired by Television Nacional. Yesterday, protesters wearing black masks spray-painted “Down with high prices” on another store and clashed with riot police.
“I never imagined that there were people like this,” said Gladys Sanhueza, 67, outside a drugstore in Santiago. “It can’t be possible that poor people are dying so that rich people can make more money.”
Chilean President Michelle Bachelet, echoing criticism by other political leaders, said it was “shameful” for drugstores to take advantage of consumers during hard times.
“This impacts thousands of Chileans at a time of economic crisis, especially poor familie…

Chile’s Fasa Agrees to Pay $1 Million for Collusion

By James Attwood and Nathan Gill March 25 (Bloomberg) -- Farmacias Ahumada SA, Chile’s second-biggest pharmacy chain known as Fasa, said it fixed medicine prices with rivals and will pay a $1 million fine.
Fasa reached an agreement with antitrust regulators in a case involving products sold from November 2007 to March 2008, the Santiago-based company wrote in a statement e-mailed today.
Regulators accused Chile’s three largest pharmacy chains of agreeing to increase prices on 222 medications in a case presented in December. The two other pharmacies, Salcobrand and Cruz Verde, deny the charges, the regulator said on its Web site. Fasa’s agreement requires approval by an antitrust court.
“This is a historic legal case to ensure that the market functions well for everyone,” Finance Minister Andres Velasco told reporters today in Santiago.
Fasa’s executive management team wasn’t aware of the price-fixing practices, the company said in a statement.

Peru Restarts War of the Pacific with UN Lawsuit against Chile

March 21, 2009 (Southern Affairs) -- Peru, home of the ancient Incan Empire, is trying to win back by reason what it lost by force. On March 19, Peru asked the United Nations to settle a century-old dispute with its southern neighbor Chile over some of South America's richest fishing grounds.

Jose Garcia Belaunde, Peru's foreign minister, wants the UN's International Court of Justice in The Hague to hear its claims to an area of about 50,000 kilometers of ocean off its southern coast claimed by Chile since the 19th century War of the Pacific. Chile is having none of it.

"Chile will continue to exercise sovereignty over maritime areas under Chilean jurisdiction," Mariano Fernandez, Chile's foreign minister said on March 19. However, in an interview the day before Peru presented its arguments to The Hague, Peru's Garcia Belaunde said, "the Chileans have to accept that it is the court that decides this.

If the UN accepts Peru's plea, at one time Spa…

Chile’s Cap Gains for a Fifth Day as Commodities Rise

By Nathan Gill March 19 (Bloomberg) -- Cap SA, Chile’s biggest steel and iron-ore producer, rose for a fifth day in Santiago trading as commodities surged on speculation the Federal Reserve’s steps to revive the U.S. economy will boost demand for raw materials.
Santiago-based Cap gained 2 percent to 8,920 pesos, the highest since Feb. 23. The Bloomberg World Iron/Steel Index jumped 2.5 percent and 18 of 19 commodities in the Reuters/Jefferies CRB Index climbed amid speculation that the Fed’s steps to revive the U.S. economy will generate demand for commodities to offset the risk of inflation. The Fed said yesterday it may buy more than $1 trillion in government and mortgage debt.
“This generates demand for commodities as a hedge, so this obviously made commodities climb as well as the companies related to them,” said Hernan Guerrero, an analyst at FIT Research Corredores de Bolsa SA in Santiago. “Because Cap’s a small company in the steel industry worldwide, it would be difficult for i…

Peru Seeks UN Ruling on Chile Maritime Dispute, Garcia Says

By Nathan Gill March 19 (Bloomberg) -- Peru presented the United Nations International Court of Justice in The Hague today with its claim to some of the world’s richest fishing grounds now held by Chile, Peruvian Foreign Minister Jose Garcia Belaunde said.
Garcia Belaunde said he’s confident the court will agree to hear the case, which Peru initiated about a year ago. President Alan Garcia is seeking economic rights to an area of 50,000 kilometers (19,305 square miles). It includes some of the most productive fishing grounds on South America’s Pacific coast, according to Peru’s Fisheries Society.
“The Chileans have to accept that it is the court that decides this,” Garcia Belaunde said in an interview by phone from Lima yesterday.
Chile took control of the territory in 1881 after its Navy occupied Lima during what is known as the Pacific War, according to Eduardo Araya, director of the history institute in Chile’s Universidad Catolica de Valparaiso. It claims the border was established …

BCI Gains to Highest in 2 Weeks on Lower Rates

By Nathan Gill March 17 (Bloomberg) -- Banco de Credito e Inversiones, Chile’s fourth-largest lender, rose to the highest in two weeks in Santiago trading on speculation lower interest rates will boost lending.
BCI, as the bank is known, gained 2.6 percent to 11,390 pesos. Larger rivals Banco Santander Chile and Banco de Chile both rose more than 2 percent.
“Chilean banks are beginning a strategy of taking the central bank’s rate reduction and applying it immediately to short-term consumer rates,” Nicolas Buccicardi, an investment analyst at Wealth Advising Co. in Santiago, said by phone. “These aggressive cuts create incentives for consumers to take on debt.”
BCI has gained 7 percent in the three sessions since policy makers cut the overnight rate to 2.25 percent, the lowest since December 2004.
Chilean central bank President Jose De Gregorio said yesterday that policy makers’ decision to slash lending rates this year is being matched by domestic banks. The 5-point reduction in the past…

Chile State Bank Cuts Rates, Pressuring Private Banks

By James Attwood and Sebastian Boyd March 13 (Bloomberg) -- Chile’s government-owned Banco del Estado de Chile today said it will cut interest rates to consumers, adding pressure on the country’s private banks to follow suit.
Chile’s central bank last night slashed its benchmark interest rate by 2.5 percentage points, bringing cuts this year to 6 percentage points, the steepest reduction since the bank started using its interest-rate policy 15 years ago.
Government officials, including Finance Minister Andres Velasco, have urged banks to pass on rate cuts to customers.
“It is crucial that credit flows,” Velasco said today. The central bank’s surprise rate reduction last night, “creates even more space for banks to lessen credit restrictions.”
Banco del Estado will trim interest rates by at least 4 percentage points on the assumption that the central bank will lower its benchmark rate by a further 1.25 percentage points to 1 percent, Chairman Jose Luis Mardones said today.
“We will not wai…

Chile’s Vapores Sinks to 6-Year Low on Cash Concerns

By Nathan Gill March 12 (Bloomberg) -- Cia. Sudamericana de Vapores SA, Latin America’s largest container ship company, plunged as much as 13.9 percent and closed at a six-year low on speculation it will struggle to pay maturing debt.
The share tumble, which followed an 8.7 percent slide yesterday, prompted the Santiago Stock Exchange to request financial information from the company. Vapores Chief Executive Juan Antonio Alvarez replied in a statement that the company has “no relevant news” to report beyond what was made available in its last quarterly results, according to a posting on the exchange’s Web site.
“There’s a rumor that they need cash,” Cristina Acle, director of equity research at CorpResearch SA, said today by phone from Santiago. “The problem with Vapores is that they have very opaque finances. You can’t see all of Vapores debt in their financial sheets. This adds risk to the company.”
Valparaiso, Chile-based Vapores fell 2.3 percent to 317.9 pesos at 5 p.m. New York tim…

Chile’s Bachelet Replaces Foreign, Defense Ministers

By Sebastian Boyd and Nathan Gill March 12 (Bloomberg) -- Chilean President Michelle Bachelet replaced her foreign and defense ministers as the government works to confront an economic slump.
Mariano Fernandez, former ambassador to the U.S., was named foreign minister, replacing Alejandro Foxley, who is returning to the economic research group he used to run. Government spokesman Francisco Vidal will become the new minister of defense, replacing Jose Goni, the government said on its Web site.
Bachelet is in her last 12 months in office with her popularity at its highest level since April 2006, the month after she took up the post. She left Finance Minister Andres Velasco in place to implement a $4 billion economic stimulus package.
“The times to come are going to be hard and will be decisive in successfully confronting the economic crisis,” Bachelet said today in a statement on the government’s Web site.
Foxley had previously said he wished to step down, she said. He was the most popular…

Chile to Spend Savings in ‘Lean Times,’ Bachelet Says

By Nathan Gill and Sebastian Boyd March 11 (Bloomberg) -- Chile will spend savings accumulated from record copper prices to fight unemployment and will emerge stronger from the global economic slowdown, President Michelle Bachelet said.

The government’s $4 billion economic stimulus package offers long-term solutions rather than populism, she said today in a speech to students and teachers in Santiago, were she was distributing the first of 30,000 computers her government is providing to pupils from low-income families.
Chile’s government, which owns Codelco, the world’s biggest copper miner, had $22 billion of savings from the commodity boom stashed away at the end of January. The government plans to use some of that money on extra spending that it expects will add 1 percentage point to economic growth this year.
“We didn’t lose our sense of direction when the price of copper was high, we saved for difficult times,” Bachelet said. “The lean times have arrived. Today we aren’t saving the…

Unasur Defense Ministers Play Down Regional Conflicts at South American Summit

March 10 (Southern Affairs) -- Unasur's defense ministers met again in Santiago today to kick off the South American Defense Council. Amid handshakes and congratulations, the ministers emphasized the historic nature of the meeting which they say will help ensure peace and democracy throughout the continent.

What the ministers did not discuss publicly was how they planned to reestablish functional relations between eight of the 12 nations of Unasur. While the thundering applause the ministers gave each other on "a job they can be proud of" left no doubt as to the goodwill between the women and men sitting around the table, the nagging question of how to resolve old and new conflicts took a back seat to the apparently more pressing need to "reaffirm basic principles," like sovereignty, peace, and democracy.

The lack of any comment on a possible resolution to the conflict and rupture of diplomatic relations between Colombia and Ecuador following Colombia's Mar…

Cencosud Falls to Two-Month Low on Economic Slowdown

By Nathan Gill March 5 (Bloomberg) -- Cencosud SA, Chile’s biggest retailer, fell to the lowest in two months on expectations that weak economic activity will increase the nation’s unemployment rate and hurt consumers’ ability to spend.
Cencosud dropped 2.4 percent to 976 pesos, the lowest price since Jan. 5. Chile’s central bank reported today that January economic activity shrank the most in almost a decade from the same month a year earlier. A Feb. 27 report showed joblessness rose to 8 percent in the three months ending in January.

“People expect the increase in unemployment this year will be more than 10 percent,” Francisco Obilinovic, an investment analyst at Penta Estrategia y Inversiones, said today by phone from Santiago. “This means that investment risk will increase considerably and that late credit payments to retailers will increase. Everyone is expecting that the retail situation will deteriorate more, even though they’ve already been punished a lot.”

Chile Economy Shrank 1.4% in January, Most in Decade

By Sebastian Boyd and Nathan Gill March 5 (Bloomberg) -- Chilean economic activity shrank by the most in almost a decade in January, fueling expectations that policy makers next week will cut interest rates for the third time this year. The economy contracted 1.4 percent in January from the same month a year earlier, the central bank reported on its Web site, in line with the median forecast of 22 economists surveyed by Bloomberg for a 1.6 percent contraction. The economy last shrank more in July 1999. Chile’s economy is slowing on lower consumer spending and declining demand for its exports. The central bank already lowered interest rates by 3.5 percentage points this year and the government in January announced a $4 billion package of tax breaks and subsidies to boost domestic demand. Growth was “quite a lot lower than we expected,” said Mario Gonzalez, an economist at Banco BCI SA’s brokerage unit in Santiago. “We will probably see an acceleration of monetary policy. Monetary poli…

Cap Gains as China Speculation Eases Price Concern

By James Attwood and Nathan Gill
March 4 (Bloomberg) -- Cap SA, Chile’s biggest steel and iron-ore producer, rose the most in a month on speculation Chinese stimulus spending will limit iron-ore price declines.
Cap gained 4.3 percent to 8,211 pesos, the steepest increase since Feb. 5. The stock dropped 11 percent last week.
China’s former statistics bureau head Li Deshui told reporters in Beijing that Premier Wen Jiabao will announce “a new stimulus package” in his annual address to the nation’s legislature tomorrow, adding to the government’s $585 billion spending plan.
“Three months ago the market expected the price of iron-ore would fall 30 percent,” Leonor Skewes, an analyst at Banco Bice, said by phone from Santiago today. “If there were a stimulus it is most likely that the fall in prices would be about 20 percent. This would be positive for Cap.”

De Gregorio Says Chile Bank Will ‘Probably’ Cut Rates

By Nathan Gill and Sebastian Boyd March 2 (Bloomberg) -- Chile’s central bank will probably lower its benchmark lending rate for the third time in as many months at its next meeting on March 12, bank President Jose de Gregorio said today
The bank “took very aggressive action in its monetary policy in its last meeting,” De Gregorio said. “As we communicated after that meeting, very probably this will continue next week, but it’s something we will have to evaluate.”
The central bank is slashing interest rates after raising them to a 10-year high of 8.25 percent last year. Slumping domestic demand means inflation is no longer a threat, Manuel Marfan, a member of the rate-setting committee told El Mercurio in an interview published yesterday. Chile’s economy probably contracted 0.8 percent in January from a year earlier, according to the median estimate of 15 analysts in a Bloomberg survey.
De Gregorio spoke to reporters in Santiago today after meeting with President Michelle Bachelet, who …