19 March 2009

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 its shares to act differently than the industry as a whole.”
    
Cap will probably rise to 9,000 pesos by the end of 2009, according to FIT Research.