Equities: More Downside Could Lead To Value

While Chile's IGPA equity index continues trading sideways, with little indication of future direction, we believe the longer-term outlook for the bourse implies there is still moderate downside ahead. In our view, as the eurozone sovereign debt crisis and the risk of a double-dip recession in the US continue to weigh on investor sentiment, the Chilean bourse is unlikely to see a significant move up any time soon. Indeed, as many companies listed on the index continue to be expensive (on a price-to-earnings basis ) we would need to see more downside ahead before the IGPA becomes attractive once more.

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