Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Chilean Miners Rescue and Investing in Chile

Stock-Markets / Emerging Markets Oct 18, 2010 - 07:00 AM GMT

By: Money_Morning

Stock-Markets Best Financial Markets Analysis ArticleMartin Hutchinson writes: The efficient, well-managed rescue of the 33 Chilean miners was an affecting spectacle for the world. It also should remind us that Chile is a well-run country, and that in an era when commodities are ever more important to the global economy, it is becoming an essential part of investors' portfolios.

The Chilean miners' experience reminded us once again of the huge gulf between countries that work and countries that don't. Just as the Chilean earthquake last February caused only 521 casualties compared to the 200,000 in Haiti the previous month, so the Chilean mine disaster brought together expertise from all over the world in a remarkably effective and competently managed rescue effort. It is a distinction that does not simply measure the difference between rich countries and poor countries: the 2008 Sichuan Chinese earthquake killed an estimated 90,000 people, while the Russian coal mine disaster in May killed 90 people both in countries of comparable wealth per capita to Chile.

Earthquakes are terrifying and mining is a dangerous job anywhere, but you're much more likely to survive an earthquake or a mine disaster in some countries than in others. Indeed Chile's performance both in the earthquake and this mine disaster was of the highest quality probably only in Germany, Scandinavia and maybe Singapore could one reliably expect public rescue services to work so effectively.

For investors, the Chilean earthquake and mine disaster experiences have an important lesson: Countries with really good management should be promoted sharply up investor league tables, for a number of reasons.

First, they are likely to enjoy better economic results. Their efficiency will use resources and labor better, there will be fewer sink-holes of value destruction in the public sector and the uncompetitive private sector and they will generally be more open to new ideas and new techniques. The mine rescue for example used people and equipment from all over the world a drill rig and drill bits from Schramm of Pennsylvania, a German-designed rescue pod and video equipment from Japan. Chile's ability to assemble a state-of-the-art operation for a unique situation demonstrated the country's ability to flourish in a competitive globalized market.

While there are other countries with Chile's management capability though not many they do not have Chile's wealth of natural resources and they generally have labor costs a substantial multiple of Chile's. Chile has shown itself well managed under governments of both its political parties, but its current pro-business regime seems likely to be more active in removing obstacles to growth and encouraging the investment needed for it. Since it has the capabilities and resources of a much richer country, Chile seems likely to become one in pretty short order, and investors in Chile should benefit from the rapid growth that this emergence will bring.

Investors seeking exposure to the overall Chilean economy should first consider the iShares MSCI Chile Investible Market Index Fund (NYSE: ECH), which invests in the overall Chilean market index. At $500 million, this is large enough to be decently liquid and has an expense ratio of only 0.86%, very reasonable for a single country fund. Its main disadvantage, as for the Chilean market in general, is a price/earnings (P/E) ratio of 25 and a yield of only 1.1%, but you should remember that Chilean trailing earnings currently include the recession of 2009 and the difficult post-earthquake period, so even without rapid economic growth an earnings rebound would be likely.

For a higher yield, you should look at Vina Concha y Toro SA (NYSE:VCO) the country's largest wine producer, which although trading on 21 times earnings has a dividend yield of 3.9%. Chilean wine has a quality advantage over most other producers in that the country's remoteness allowed it to avoid the 1873 phylloxera blight, so its grapes are generally considered of exceptional quality. VCO is thus a leader in the country's exceptional agribusiness sector, selling a product that is marketable at a premium above other commoditized wine producers.

It's difficult to get direct exposure to Chilean mining because the dominant copper producer, Codelco, is state owned, while the smaller Chilean mining companies like the San Esteban company which owned the San Jose mine where the rescue took place have generally suffered from low investment and have sub-standard safety records. However one major participant in Chile's mining is Freeport McMoran Copper and Gold (NYSE: FCX) which has three copper/gold mines in Chile and is investing $700 million in expansion of its El Abra project. FCX's stock price has run up in the last few weeks, as with most mining companies, but at a 12.64 times trailing P/E ratio it remains good value.

Chile isn't just a spice for your investment portfolio; it's an essential ingredient!

Action to Take: As the rescue of the Chilean miners demonstrates, this Latin American country has come a long way. Chile is superbly managed and it's a major commodities exporter. With the U.S. economy and many other developed economies struggling, investors simply can't miss out on this emerging economic powerhouse. At the very least they should consider gaining general exposure through the iShares MSCI Chile Investible Market Index Fund (NYSE: ECH). To cash in on the country's vibrant export sector consider Vina Concha y Toro SA (NYSE:VCO) and Freeport McMoran Copper and Gold (NYSE: FCX).

Source :

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules