05 March 2009

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.”