“Avoiding the copper downside in the last weeks will not affect investment”

This was part of the analyses conducted by the Executive Director for CESCO at ICARE, whom again was invited to participate in the conversation panel that analyzes the Monthly Business Confidence Index (IMCE), together with George Lever, Research Manager for the Santiago Chamber of Commerce; and Nicolas Jobet, Development Manager from Socovesa Santiago. From her perspective, a large part of the mining sector thinks this is something occasional that should not affect the investors’ decisions, as projects are long-term.   

Although during July, the Monthly Business Confidence Indicator (IMCE), prepared by Icare and the School of Business from Universidad Adolfo Ibanez (UAI), had a small decline of 2.89 points regarding June (55.05), accrues seven consecutive months in a growing trend and shows an increase of about 10 points in 12 months.

The specific decline of this month is mainly due to the fact that perspectives in mining has a 12-point drop. This may be influenced by the uncertainty brought by the trade war between the US and Chile, which has impacted the copper price.

“Even though there was a drop in IMCE for the mining sector, the decline in business confidence in mining is a reflection of what happened to the copper price in the last weeks. It’s not a long-term trend and perspectives are still very positive for the sector”, said Alejandra Wood.

With regard to the other two sectors analyzed (commerce and construction), commerce continues to be the most optimistic, whereas construction continues to be the most pessimistic area, as it remains below 50 points in optimism. In this respect, Nicolas Jobet, Development Manager for Socovesa Santiago, noticed that “there is a disconnection between perspectives and reality, as this year the industry indicators have been favorable”.

Also, he explained that “cessation of work, zoning plan freeze and regulatory controversies scare the investors”, affecting expectations.

Automation and Digital Transformation: the Biggest Challenges

Both the Executive Director for Cesco and the Development Manager for Socovesa coincided in the need for promoting automation and digital transformation in their respective industries. Regarding the construction sector, Jobet assured this challenge is still at an early stage, as they have just started to name and coordinate it with isolated initiatives.

At the same time, although Alejandra Wood said that automation in the mining sector “is here to stay”, she warned that “banking cyber-attacks show that we are not prepared to face this issue. We are being impacted and we are not prepared”. For the same reason, she warned that “no context has been generated here to discuss this”. Nor has a public-private panel discussion been generated where this issue is addressed from all edges”.

On the other hand, George Lever said that, in commerce, “everything seems to indicate that market is to reduce its manpower”. This challenge is very important”, with regard to automation.

Investment Prospects

Jorge Bande, Director for Cesco and other companies, in his question sent to panel, commented that investment recovery has been lower than expected at the beginning of the new government. “After the change of government, a flood of positive expectations raises and this should be normalized. It is becoming more balanced now”, commented Lever.

However, Research Manager for the Santiago Chamber of Commerce assured that “results from the first quarter in terms of investment were good, as these were numbers seen long ago. Investment is increasing slowly, expectations for the rest of the year are relatively good”.

If you want to revisit this live conversation, please access: http://www.icare.cl/contenido-digital/confianza-empresarial-julio-2018/