Investors regain favorable perception of the Chilean economy for the next 12 months

This is an automated translation of the original release published in Spanish.

PRESS RELEASE from CFA Chile and Universidad Adolfo Ibáñez
April 2024

● The CFA Society Chile/UAI Asset Management Survey revealed that investors are choosing to take a risk higher than their benchmark in their investment strategies.

● Two out of three investors showed a level of favorable expectation towards raw materials, which corresponds to an increase of 40 pp compared to the previous measurement.

Santiago, April 2024.- CFA Society Chile and the Business School of the Universidad Adolfo Ibáñez announced the results of the second Asset Management Survey of 2024. This quarterly survey seeks to collect the main economic expectations, risks and vision of investment strategies. investment managers in Chile. Some 39 people belonging to the local financial industry participated in this edition.

According to the survey, 69% of investors consider that the Chilean economy will be “somewhat stronger” compared to its current performance, while 3% believe it will be “much stronger.” On the other hand, 15% estimate that the economy “will remain the same” and 13% believe that it will be “somewhat weaker” or “much weaker.”

“The results reveal that 72% of investors have a positive view of the Chilean economy, which corresponds to a considerable increase in their levels of optimism. In the previous quarter, two out of three respondents believed that economic performance would remain the same, while only 4% of investors answered that it would be “somewhat stronger” or “much stronger.” This is a very important change in expectations,” says the president of CFA Society Chile, Hugo Aravena.

Investors' optimism was also expressed in their portfolios. Asked about the level of risk they are taking in their investment strategies compared to their benchmarks, 54% answered that they opted for a “higher” risk, which corresponds to an increase of 14 pp compared to the previous quarter.

“The percentage of respondents who claim to be taking a 'higher' risk than their reference portfolio is five times the number who say they are taking a 'lower' risk than their reference portfolio. Therefore, a consolidation is observed in the upward trend in risk appetite,” Aravena emphasizes.

On the other hand, the risks of a recessionary scenario in the next 12 months remained compared to the first quarter survey. In this version, 67% consider that it is “quite unlikely” that the Chilean economy will experience a recession and 26% believe that it is “very unlikely.”

Regarding inflation, 13% of those surveyed believe that in the coming months it will be “much lower” and 46% answered “slightly lower.” 39% of those surveyed estimate that it will remain “the same as now,” while only 3% answer that it will be “slightly greater” next year.

Regarding the most important tail risks for local investment assets, the geopolitical risks category moved to first place with 33%, which corresponds to an increase of 10 pp compared to the previous quarter. In second place was Chilean political instability with 18% (+2 pp), followed by the persistence of global inflation with 18% (+6 pp), the pension reform with 10% (-4 pp) and the management of global monetary policy with 10% (-6 pp).

In the case of expectations for the Monetary Policy Rate (MPR), 90% of investors predict that the indicator will be in a range of 4.0% to 6.0% in the next 12 months. The above is consistent with the Central Bank's projections, which point to an MPR of 5% at the beginning of 2025.

Asset classes and local stock market

The CFA Society Chile/UAI Asset Management Survey reveals a substantial increase in preferences towards raw materials. In this version, 65% of investors had a favorable or very favorable level of expectation for this asset class, which corresponds to an increase of 30 pp compared to the previous quarter. On the other hand, 64% had a favorable level of expectation towards alternative assets (+4pp). Although investors maintained their optimistic outlook towards equities (VR), their levels were less intense compared to the previous measurement. In the case of Developed VR, 57% have a favorable or very favorable expectation, which corresponds to a decrease of 3 pp compared to the previous quarter. On the other hand, Emerging RV scored 49% (-21 pp) and Chile RV 51% (-6 pp).

Furthermore, 62% of investors have a favorable or very favorable expectation of International Fixed Income, which represents a drop of 13 pp compared to the previous quarter. For its part, Local Fixed Income had a favorable expectation level of 51%, experiencing a drop of 14 pp.

Regarding the perception of the valuation of the IPSA, 61% of those surveyed consider that the index is adequately valued, which corresponds to an increase of 41 pp compared to the first quarter survey. In contrast, 35% believe that the index is undervalued and only 4% that it is overvalued.

“It is the first time since we conducted this survey that the predominant view is that IPSA shares are correctly valued, revealing a strong change in the perception of the local stock market, despite the significant rise we have had in the local stock market since our previous survey,” concludes the president of CFA Society Chile.

About CFA Society Chile

CFA Society Chile is an association of 200 professionals related to investment management in Chile, founded in October 2015 and that promotes a financial industry that contributes to the development of the country, with the ultimate goal of benefiting society as a whole.

CFA Society Chile is part of the CFA Institute, a global non-profit organization that carries out the most rigorous and prestigious certification globally for financial analysts.