Morgan Stanley raises Chile IPSA price target to 10,900 on growth outlook

Published 02/09/2025, 11:08
© Reuters.

Investing.com - Morgan Stanley has raised its price target for Chile’s IPSA index to 10,900 for mid-2026, representing an expected return of approximately 25% based on risk/reward assessment.

The investment bank’s updated target, previously its bull case scenario, reflects its "Andean SPRING thesis" which it says is currently playing out in the Chilean market. Morgan Stanley notes the asymmetry of returns skews materially to the upside at the current 11.2x price-to-earnings ratio versus 13x at their target.

The firm identifies three key factors supporting equities in its base and bull scenarios: a pro-growth reform agenda, stronger local capital markets as pension reform is implemented, and rebalancing of the economy from fiscal impulse to investment.

Morgan Stanley’s analysis suggests that attractive Chilean peso (CLP) valuations and short positioning indicate a market-positive post-election scenario is not currently priced in. The firm states that the magnitude of any potential rally would depend on the Congressional composition.

The investment bank outlines several currency scenarios, noting its base case might not create meaningful tailwinds for CLP but could see a mild rally towards year-to-date lows of 930, while its bull case could bring USD/CLP closer to or below 900, and its bear case could prompt a break above 1000.

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