Unexpected Surge of 'Pro-Market' Right-Wing Candidate in Chile Presidential Election Boosts Currency and Stock Market

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Suhwan] Unexpected evaluations continue as right-wing candidates perform well in the presidential election in Chile, a Latin American country. Since democratization in 1989, the center-left camp has mostly held power, and Chile, which was part of the Latin American leftist bloc, is analyzed to have rejected a sudden shift to the left. As a result, market anxiety eased, and the Chilean peso and major stock markets surged sharply.

As of June 22, the vote count for the Chilean presidential election held on the 21st (local time) was 99.99% complete, with far-right candidate Jose Antonio Kast taking first place with 27.91%, advancing to the runoff.

He advanced to the runoff along with left-wing candidate Gabriel Boric, who came in second with 25.83%.

Jose Antonio Castro [Photo by AP Yonhap News]

In the parliamentary general election held alongside the presidential election, left-wing parties lost a large number of seats in both the upper and lower houses, resulting in no camp securing a majority.

Kenneth Bunker, CEO of political consulting firm Trequintos, said, "(According to this election result) no party can pass legislation alone," adding, "This is very negative news for left-leaning parties."

Gabriel Boric [Photo by Reuters Yonhap News]

Attention is focused on the right-wing camp's strong performance in this Chilean election, where the left-wing camp was expected to win.

In particular, conservative economist candidate Parisi's surprising third place with 12.80% of the vote is noteworthy. Conservative candidates took first and third place in the vote share.

On the 21st, when the Chilean presidential election was held (local time), candidate Gabriel Boric was seen voting at a polling station in Punta Arenas, Chile.
[Image source=Reuters Yonhap News]

There are also expectations that significant changes will come to Chile's market economy model.

Especially in Chile, which has been a pillar of the Latin American leftist bloc with mostly left-wing governments over the past 30 years, this election could bring changes to the political landscape.

On the 21st, when the Chilean presidential election was held (local time), candidate Jose Antonio Kast was seen voting at a polling station in Santiago, Chile.
[Image source=Reuters Yonhap News]

In Chile, after large-scale protests in 2019 against social inequality, skepticism toward the neoliberal economic system increased, raising the possibility of a left-wing government change.

In last year's referendum, nearly 80% of the people chose to abolish the current constitution, which was enacted based on neoliberalism during Augusto Pinochet's military regime (1973?1990), and left-wing candidates were strong in this year's constituent assembly election as well.

Recently, as crime rates surged and clashes between police and separatist groups continued, social unrest intensified, increasing political instability. Experts analyze that citizens chose stability over change and began supporting conservative candidates.

[Image source=Reuters Yonhap News]

Miguel Angel Lopez, a professor at the University of Chile, said, "In the current situation where crime rates are rapidly increasing in Chile, people withdrew their support for (left-wing candidate) Boric because they do not know what would happen if they chose change."

Meanwhile, with the pro-market conservative candidate performing well in this election, market anxiety eased, and stock prices and currency values surged.

The peso's value once soared by up to 3.5%, and now shows strength in the 2% range, trading at 812 pesos per dollar.

The S&P IPSA index of the Santiago Stock Exchange in Chile recorded a rise of about 10%, the largest increase since March last year.

Mary-Therese Barton of asset management firm Pictet Asset Management said, "The market's response is very positive."

[Image source=AP Yonhap News]

Daniel Rico, a researcher at RBC Capital Markets, told Bloomberg News, "What became clear from yesterday's presidential election results is that Chile rejected a sudden shift to the left," adding that whoever is ultimately elected "will need to seek consensus on practical and centrist policies."