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Chile macro: bottoming out? – Market Analysis- CELFINCAPITAL

August unemployment flat MoM
Chile’s INE (National Statistics Institute) reported the country’s unemployment rate at 10.8% in August, unchanged from 10.8% in July – in line with our expectation, and marginally below the street’s 10.9%. This compares to 8.2% in August last year, and an average of 7.7% in 2008. At the end of August 784,590 people were unemployed, the highest figure on record, and more than the 698,000 jobless reported in August 1999 (when unemployment was 11.9%). The figure for employment creation was down 1.5% YoY in August (in line with our
figure of 1.6%), continuing a trend that began in March. Sectors with the greatest impact on a now less dynamic labor market were electricity, gas and water, construction, and mining. Note that job losses, reported as 98,000 positions, were partially offset by 47,000 jobs created by the government. This deterioration in the labor market was in line with our prognosis for  Chilean employment, and weak economic activity. We expect unemployment to decline in the months ahead, with the summer season and its demands for force in agriculture.

Download report: Chile_market analysis_30092009_CELFINCAPITAL

Manufacturing: still down
Chilean industrial production was down 3.8% YoY in August, worse than our –2% forecast, though nearly in line with market consensus estimates of –4%. The figure also benefits from a low comparison base in 2008 and one more day in the month of August in 2009. Total monthly production figures continue to be lower in tandem with still weak exports (less demand, weak dollar, rising oil prices); total production in the first eight months of 2009 is still down 8.6% YoY.
By segment, capital goods were up 3.1% YoY, durables down 14.8%, intermediate goods down 3.5%. By industry, production was down in food processing, non-metallic mining, and sawn timber. Industrial sales, on the other hand, were only 0.2% down YoY in August, considerably better than the market’s –3.1% estimate and our forecast of –2%.
Mining production was up 7.7% YoY in August, led by copper, which was up 7.8% YoY on stronger production of cathode (+7.8%) and electrolytic copper, which includes concentrates (+1.5%). Year-to-date, mining production is down 2.7% YoY (copper, down 2.3% YTD).
Looking ahead, we have some production pressures coming from mining in 4Q09 as labor negotiations begin. Currently, unionized workers at BHP Spence – seeking a 5.5% wage increase, social benefits and bonuses linked to copper prices – are likely to strike if the company does not make an offer they find adequate. Labor contracts expire today, making a strike legal after a five-day, government-assisted mediation period. The Spence mine
produced about 165,000 tons of cathode, last year. This year it is expected to produce 200,000 tons of copper. The Spence negotiations will set a precedent for forthcoming labor talks: at Codelco’s Andina Division in October, Minera Escondida in November, Codelco Norte in December, and Cerro Colorado in January.
Electricity generation was up 1.4% YoY in August. Retail sales were up 2.9% YoY – while supermarket sales continued their unexpected uptrend, at 6.7% higher YoY in August.

Source: CELFINCAPITAL, 30.09.2009


Filed under: Chile, Latin America, News, Services, , , , , ,

Chile: Paper & Forest Products – Empresas CMPC- by CELFINCAPITAL

Last night, LatAm pulp and paper producer CMPC signed a memorandum of intent (MOI) with Aracruz Celulose for the potential sale of a package of assets comprising industrial plants, forest and land jointly known as the Guaíba Unit, in the county of Guaíba in the southern Brazilian state of Rio Grande do Sul. This is CMPC’s second acquisition in Brazil (See our April 20 note on tissue-maker Melhoramentos Papeis, Building an empire in LatAm
tissue). The transaction price – subject to customary contractual conditions and adjustments – is US$1.43bn, and in our view is attractive considering the long-term potential of the assets.
The MOI gives CMPC exclusivity for 90 days starting September 22; if the transaction goes forward, the assets would likely be transferred in December 2009.

Download full report: CELFINCAPITAL-CMPC_market analyis_23092009

Source: CELFINCAPITAL, 23.09.2009


Filed under: Chile, Energy & Environment, Exchanges, Latin America, News, Services, , , , , , , ,

BMV – Mexican IPO Sales May Resume in 2010, adding joint trading link with Chile’s BCS

Mexican companies may resume initial share sales in 2010 as equity prices rebound toward the end of this year, said stock exchange Chairman Guillermo Prieto Trevino.

There will be no initial public offerings in 2009 as the economic slump depresses share prices, Prieto said in an interview in his office. Mexico had two IPOs last year, one of them by Bolsa Mexicana de Valores SAB, the company that Prieto heads and the operator of the stock exchange.

“Towards the second half of the year, we’re going to see some kind of recovery in stock value, which has really been punished,” Prieto said in Mexico City. “It doesn’t mean that we’ve touched bottom, but we’re closer.”

Mexico’s Bolsa index has plunged 13 percent this year, the worst performance among Latin American stock benchmarks. The central bank predicts the economy may shrink as much as 1.8 percent in 2009 as the U.S. recession chokes exports, migrant remittances, tourism and foreign direct investment to Mexico.

Sales of medium- and long-term bonds may total $15 billion this year, about even with 2008, Prieto said. Demand for corporate debt will be boosted by pension funds, he said. Mexican government-regulated pension funds manage about $65 billion in assets, making them the country’s biggest institutional investors.

Corporate Debt ETF

The Bolsa plans to introduce an exchange-traded fund that will invest in private corporate debt, Prieto said. Exchange- traded funds issue a fixed number of shares and trade throughout the day like stocks. Most are designed to passively track a benchmark equity index. The Bolsa’s fund, called Corpotrac, will begin trading in March, Prieto said.

Mexico will begin joint trading with Chile’s stock exchange by the second half of this year.  The exchange is also in talks for combined trading with Brazil, Colombia and Peru, he said.

Prieto said a decision for him to leave Bolsa Mexicana or to separate his positions as chairman and chief executive officer will be made before April. Prieto said last year he was planning on making a decision by February.

Source: Bloomberg, 13.02.2009,  Valerie Rota in Mexico City

Filed under: BMV - Mexico, Chile, Exchanges, Mexico, News, Trading Technology, , , , , , , , , , , , , , ,