Chile's leading rightist candidate, José Antonio Kast, is making up ground on the long-time opinion poll leader, leftist, Boric, with a month to go before Chile's 21 November general election.
In the latest Cadem poll, Kast scored 21% versus 20% for Boric. This is the first time since the party nomination elections in July that Boric has not led in an opinion poll conducted by Cadem.
This is consistent with our view that a closely contested second-round presidential vote on 19 December is likely, as both left and right voters coalesce around single candidates.
Furthermore, fears of a Boric presidency overlook the following mitigating factors:
The likelihood that there is no clear congressional majority (a comfort for those who fear a shift to the left and a concern for those wishing for structural reform).
Boric is a pragmatic leftist not a communist (like the candidate Jadue that he beat in the nomination contest).
Chile retains legal safeguards for orthodox economic policy (fiscal responsibility law, central bank autonomy, inflation targeting).
Meanwhile, Chile equities (the local IPSA index) look attractively valued: trailing PB is 1.1x (for 8.6 ROE) and forward 2021f PE is 8.6x (for 7% earnings growth in 2022f). Respectively, these multiples are at 25% and 40% discounts to the 5-year median.
Chile equities are down 18% ytd, compared with up 1% for MSCI EM (Chile is a 0.4% weight), down 2% for MSCI LatAm (Chile is a 6.0% weight), and up 36% for Copper commodity prices (Chile mines close to 30% of global copper and metals exports account for over 20% of Chile's GDP).
For more, see our recent report – Chile polls led by leftist Boric, but a tight second-round vote is likely.
Chile votes left, May 2021
Peru’s more moderate new cabinet, October 2021
Democracy disappoints in LatAm, May 2021
Contrarian calls in emerging market equities, September 2021