MercoPress. South Atlantic News Agency

Cement maker shares soar in Chilean markets on reconstruction expectations

President-elect Piñera is expected to appeal to the Chilean sovereign wealth fund

Chilean cement maker Melon led earnings in the IPSA stock market Wednesday operations with shares soaring 68% on expectations that the company would benefit from reconstruction efforts. Nevertheless, the IPSA select index fell 1.36% to 3708.91.

In the three days since the devastating 8.8 magnitude Saturday earthquake in Chile, Melon shares have ballooned 669%, from 39 pesos last Friday and were closing on 300 pesos on Wednesday,

Nerves were rattled again Wednesday after three big successive aftershocks shook Chile’s south-central regions Wednesday but no tsunami followed. Preliminary information by the US Geological Survey ran from 5.9 to 6.3 points magnitude.

In other local markets Chile’s peso closed at its strongest point in five weeks against the US dollar, 514 pesos, on expectations of a flood of new greenbacks coming into the market as the country dips into its sovereign wealth fund to finance reconstruction.

Faced with massive infrastructure damage, investors are expecting President-elect Piñera, who takes office March 11, to look to the sovereign wealth fund. The government has some 11 billion US dollars in the offshore Economic and Social Stabilization Fund, which it can tap to pay for reconstruction.

Last year, it withdrew about 8 billion from the fund to finance a 4 billion fiscal stimulus package and to pay for the fiscal deficit it incurred as a result of increased spending and lower revenue.

Although government officials have repeatedly declined to provide an estimate for the damages, analysts put them at 20 billion to 30 billion US dollars.