Chile

[no_free_lunch]

Is time to invest in Chile?  I have had the country on my "watchlist" for years, they are considered the most free market country in South America and yet are hitting economic issues and are now facing huge protests.  Government debt is tiny, around 27% of GDP.  Population demographics are not fantastic but it's still growing.  The GDP per capita is still well below most European countries or Canada/US, so at least in theory there is still plenty of catch up that can be done.

 

If you look at the chile etf ECH, it is right around 2009 lows.  However the dividend yield is still only around 2.5% so based on that simple metric, not so cheap.

 

Is anyone else looking at this, can anyone recommend a good way to play it?

[Saluki]

I'll be there next month.  If I were to invest in something down there, it would be water rights (which are privately owned), or land down south in Patagonia. 

 

About 40% of the population is in the capital and Valparaiso, but the south has the same geography and climate as the Pacific Northwest. You could live in a place that has the same views as Vancouver at 1/20th the price and without all the traffic.  If it keeps growing and the protests die down, I'm sure sure wealthy chinese buyers will figure that out. 

 

I own 30 hectares of timberland in Patagonia.  It's part of a lot of land that my grandfather left to be split up by his heirs after he passed away. It's not really an investment, but it doesn't cost me much to keep it, so I don't plan on selling it, but I like going down there and walking my land and drinking from the stream (I have water rights!).  Plus if you don't want to do something at work, like accept a transfer it's a very credible bluff to say "I have lots of land in patagonia where I could build a house, and enough money to last the rest of my life. So....no."

 

[Spekulatius]

Is time to invest in Chile?  I have had the country on my "watchlist" for years, they are considered the most free market country in South America and yet are hitting economic issues and are now facing huge protests.  Government debt is tiny, around 27% of GDP.  Population demographics are not fantastic but it's still growing.  The GDP per capita is still well below most European countries or Canada/US, so at least in theory there is still plenty of catch up that can be done.

 

If you look at the chile etf ECH, it is right around 2009 lows.  However the dividend yield is still only around 2.5% so based on that simple metric, not so cheap.

 

Is anyone else looking at this, can anyone recommend a good way to play it?

 

It’s interesting that this ETF is near the 2009 low, yet nothing looks really cheap. I looked at BCH and it trades at around 11x earnings and a 2x P/B. I think I‘d rather buy WFC. If I were a millennial, I would say “meh”.

[rukawa]

Is time to invest in Chile?  I have had the country on my "watchlist" for years, they are considered the most free market country in South America and yet are hitting economic issues and are now facing huge protests.  Government debt is tiny, around 27% of GDP.  Population demographics are not fantastic but it's still growing.  The GDP per capita is still well below most European countries or Canada/US, so at least in theory there is still plenty of catch up that can be done.

 

If you look at the chile etf ECH, it is right around 2009 lows.  However the dividend yield is still only around 2.5% so based on that simple metric, not so cheap.

 

Is anyone else looking at this, can anyone recommend a good way to play it?

 

It’s interesting that this ETF is near the 2009 low, yet nothing looks really cheap. I looked at BCH and it trades at around 11x earnings and a 2x P/B. I think I‘d rather buy WFC. If I were a millennial, I would say “meh”.

 

How do you invest though...just ETFs I expect and perhaps some ADRs. Seems like to really do anything you would need to setup a brokerage account there which is probably difficult. List of ADRs is here:

 

https://topforeignstocks.com/foreign-adrs-list/the-full-list-of-venezuela-adrs/

[no_free_lunch]

I believe I could invest directly.  I have an interactive broker account and have bought in other foreign markets.  However, my preference would definitely be an etf.

 

Having spent some more time on it, I am probably going to let this one pass.  I just don't see what value has been created in chile over the past decade in equities.  This concerns me as GDP growth has been okay.  As frequently happens, it seems the gdp growth is not translating to equities.

[LC]

Buyer Beware: In Chile, you are investing into this environment

 

 

 

Goes to show you that the relative peace and lawful society of western countries is paramount to long-term investing stability.

[Liberty]

I'll be there next month.  If I were to invest in something down there, it would be water rights (which are privately owned), or land down south in Patagonia. 

 

About 40% of the population is in the capital and Valparaiso, but the south has the same geography and climate as the Pacific Northwest. You could live in a place that has the same views as Vancouver at 1/20th the price and without all the traffic.  If it keeps growing and the protests die down, I'm sure sure wealthy chinese buyers will figure that out. 

 

I own 30 hectares of timberland in Patagonia.  It's part of a lot of land that my grandfather left to be split up by his heirs after he passed away. It's not really an investment, but it doesn't cost me much to keep it, so I don't plan on selling it, but I like going down there and walking my land and drinking from the stream (I have water rights!).  Plus if you don't want to do something at work, like accept a transfer it's a very credible bluff to say "I have lots of land in patagonia where I could build a house, and enough money to last the rest of my life. So....no."

 

Thanks for sharing. Curious where you live when you're not in Patagonia?

[Castanza]

I'll be there next month.  If I were to invest in something down there, it would be water rights (which are privately owned), or land down south in Patagonia. 

 

About 40% of the population is in the capital and Valparaiso, but the south has the same geography and climate as the Pacific Northwest. You could live in a place that has the same views as Vancouver at 1/20th the price and without all the traffic.  If it keeps growing and the protests die down, I'm sure sure wealthy chinese buyers will figure that out. 

 

I own 30 hectares of timberland in Patagonia.  It's part of a lot of land that my grandfather left to be split up by his heirs after he passed away. It's not really an investment, but it doesn't cost me much to keep it, so I don't plan on selling it, but I like going down there and walking my land and drinking from the stream (I have water rights!).  Plus if you don't want to do something at work, like accept a transfer it's a very credible bluff to say "I have lots of land in patagonia where I could build a house, and enough money to last the rest of my life. So....no."

 

Curious, does this also comes with mineral rights?

 

I'll be traveling down there for work most likely in June and also will be visiting a sister in-law. Any recommendations of "non-touristy" things to do in Santiago?

[no_free_lunch]

Yes, thanks for sharing Saluki.  I can see Chile being a good alternate retirement destination.  The real estate is cheaper but I assume food, utilities, public transport, services are all cheaper as well.  If you have citizenship and can get healthcare, even better.

[thowed]

Here's some Chilean stocks that might be worth having a look at:

 

They're just from a few LatAm funds I respect, though obviously the whole continent has been a struggle for a while now.  I haven't looked at them myself.

 

From memory, it's mostly quality consumer & retail stuff.

 

SAAM Sonda

SACI Falabella

Cia Cervecerias Unidas ADR

Embotelladora Andina

Inversiones Aguas Metropolitanas

Quinenco

Sociedad Matriz

Forus

 

[Spekulatius]

Here's some Chilean stocks that might be worth having a look at:

 

They're just from a few LatAm funds I respect, though obviously the whole continent has been a struggle for a while now.  I haven't looked at them myself.

 

From memory, it's mostly quality consumer & retail stuff.

 

SAAM Sonda

SACI Falabella

Cia Cervecerias Unidas ADR

Embotelladora Andina

Inversiones Aguas Metropolitanas

Quinenco

Sociedad Matriz

Forus

 

CCU is the one from the list that I am familiar with. They have been struggling due to issues in Argentine, before the hell broke lose in Chile.

 

Chile has been trading at a premium compared to the rest of the continent for a long time and that premium may not be justified any more. I think the assumption that this unrest may just blow over is unjustified.

[petec]

I spend quite a bit of time in Chile over the years. The background to the unrest is that 40 years of some of the most free market policies in the world have transformed Chile from a basket case into a fairly developed country, but the cost was no social safety net. The population was prepared to pay that price when the economy was growing at 5%, but a lot of the easy gains have been made and commodity prices aren't booming so it's now growing at more like 2%. A lot of the newly created middle class don't feel that secure, hence the protests. That and some agitation by hard left nutjobs.  This will die down, but it might take time. The government has just agreed to rewrite the (Pinochet-era) constitution.

 

I wouldn't touch a Chilean ETF with a bargepole - full of commodity exposure, which means you're not really getting exposure to Chile. CCU, Falabella, and the banks are probably the way to go. All very impressive companies, but they're only cheap relative to their own histories, not in absolute terms. Chile is traditionally an expensive market because there's a huge local pension fund bid.

 

Personally I'd be more interested in Brazil, where economic reforms are setting the stage for a potential boom.

 

 

[Saluki]

I'll be there next month.  If I were to invest in something down there, it would be water rights (which are privately owned), or land down south in Patagonia. 

 

About 40% of the population is in the capital and Valparaiso, but the south has the same geography and climate as the Pacific Northwest. You could live in a place that has the same views as Vancouver at 1/20th the price and without all the traffic.  If it keeps growing and the protests die down, I'm sure sure wealthy chinese buyers will figure that out. 

 

I own 30 hectares of timberland in Patagonia.  It's part of a lot of land that my grandfather left to be split up by his heirs after he passed away. It's not really an investment, but it doesn't cost me much to keep it, so I don't plan on selling it, but I like going down there and walking my land and drinking from the stream (I have water rights!).  Plus if you don't want to do something at work, like accept a transfer it's a very credible bluff to say "I have lots of land in patagonia where I could build a house, and enough money to last the rest of my life. So....no."

 

Curious, does this also comes with mineral rights?

 

I'll be traveling down there for work most likely in June and also will be visiting a sister in-law. Any recommendations of "non-touristy" things to do in Santiago?

 

Is it definitely in June?  I think they voting on a new constitution in March so I hope things calm down after that.  I have spent very little time in Santiago so I'm afraid I'm the wrong person to ask about "non-touristy" things there.  The Costanera center is touristy, but I would see it if you're down there (highest bldg in south america and really nice views on a good day).  I've go to the CN tower every time I visit Toronto so maybe I'm weird but I never get tired of being so high up that you are looking down on the other skyscrapers. 

 

If you can get down south, Chiloe is great.  One type of penguin goes as far north as peru, but another type only goes as far north as chiloe, so if you go to a little town called Punahuil, you can take a motor boat (about US$15,if I recall) and they will take you to a few little islands where you can see both types of penguins and take pictures.  Also in the areas near the volcanos (villarica, osorno) there are lots of places with hot springs where you can soak after a long day hiking. 

 

As for the mineral rights, yes, it does come with those, but this is in the south.  Santiago is in the middle and the mines are all up north.  There is nothing really valuable there besides water and trees. 

 

 

 

 

[Saluki]

Yes, thanks for sharing Saluki.  I can see Chile being a good alternate retirement destination.  The real estate is cheaper but I assume food, utilities, public transport, services are all cheaper as well.  If you have citizenship and can get healthcare, even better.

 

Sorry for the late reply, I just got back into town...

 

yes, The healthcare is technically free, but most people with money buy private insurance (like the uk and canada) to supplement it, but still cheaper than the US (except for some medicines, which cost more than in the US for no good reason and is one of the reasons that people are upset with the healthcare system there and are joining the protests.

 

Yes, most of the other stuff is cheaper but electricity is expensive compared to neighboring countries.  Food looked reasonable (especially beef, lamb and seafood, which was inexpenive).  In the south the heating is with wood burning stoves and it's practically free if you live in the country.

 

The roads are well taken care off (even in off the beaten path area) but there are a lot of toll roads, which people complain about too.  Still, in my city in the US we are heavilly taxed and our roads are something out of Mad Max in some parts of the city, so I don't think they should be complaining.

[Dynamic]

I visited Chile for the first time in Sep 2018 at a time when it seemed very peaceful and very clean-looking and orderly.

 

In Santiago, mostly did touristy things and enjoyed them. The city looks very clean, but take the teleférico (mountainside cable car) up to Cerro San Cristobal with the giant statue of the virgin Mary and you really start to see the veil of pollution held between the two mountain ranges and enveloping Santiago, though the view is still great. Also enjoyed a bus trip to the Valle Maipo wine region and the Concho y Toro vineyards.

 

Also went to Valdivia in the south on an internal flight. Quite chilly coming out of winter and lots of log-burners added a different form of pollution, but a rather charming little city. The Kunstmann brewery is one of many that make great German style beer thanks to the quality of the water. I'd love to return to Valdivia for longer, and to explore the mountains and forests around there. The river boat tour is worth taking to enjoy the natural beauty and visit the fortifications near the headland that guarded Valdivia from naval attacks from the Pacific.

[Spekulatius]

^ Another thing for my bucket list. Probably worthwhile to visit before it gets on the radar door for international tourism.