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Banking

<b>Chile - Savings are crucial to Santiago's salvation</b>

    Headline: Chile - Savings are crucial to Santiago's salvation
Source: Euromoney
Date: March 2000
Author: Mark Mulligan

Chile's stock market has been hampered by strict capital controls. These are being relaxed but a decline in domestic savings will also need to be reversed if the Santiago exchange is to be revived. Mark Mulligan reports

Intense takeover activity in the electricity sector, foreigner-friendly changes to capital controls and monetary easing by the central bank may have helped save the Santiago Stock Exchange from extinction last year.

Average daily volumes traded on Chile's exchange had faded from $46 million a day in 1995 to $17.7 million in 1998 but scrambled back up to around $25million in 1999, fuelled by Endesa of Spain's bold $3.6 billion takeover of Endesa (Chile) and Enersis, the country's two largest electricity companies, and helped by the partial flotation of the main water utilities.

This spate of action in the energy and utilities sectors provided short-term relief for the 37 member brokers and pushed the bourse's full-year profits up 59%, to $7.4 million. However, it also sucked liquidity from two of the most heavily traded shares in Latin America.






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