It wasn’t so long ago that fund managers, investors and equity analysts joked that Chile was like a popular make of cockroach trap that worked by luring the critter inside a box whose door wouldn’t open outwards.
An individual or mutual fund could invest in Chile, but repatriating dividends or capital gains was a tricky, expensive business and often not worth thae eVort.
However, there have been advantages to this for Chile. By locking up inward portfolio investments, making the Wxed-rate market unattractive as an arbitrage play, and discouraging Chilean companies and banks from over-exposing themselves to short-term foreign credits, Chile has been able to control Xows, stabilize the peso and inXation, and prevent capital Xight disasters such as those that afflicted Mexico, Thailand, Russia, and Brazil.
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