Strait of Hormuz military ops push Chilean stocks higher as unemployment crisis deepens

The Strait of Hormuz has emerged today as the external factor most influencing Chilean financial markets, creating a revealing tension between equity euphoria and labor market deterioration that defines the country's economic moment.

The IPSA surpassed 11,500 points to close at its seven-month highs, dragged along by a regional rally led by Brazil's Bovespa, which climbed 3.9% in dollar terms to become the session's best global return according to Bloomberg's ranking of currency-adjusted indexes. The paradox is striking: while regional exchanges celebrate, oil is up 7% on the week on the return of military operations in Hormuz, simultaneously pushing the dollar toward $940 —its seventh consecutive session of gains— and fueling expectations that the Federal Reserve will hike rates at its next meeting. Chile, an open economy dependent on imported energy inputs, fits poorly into that narrative of superficial equity optimism.

The domestic backdrop is grimmer. The unemployment rate reached 9.5% in the May-July quarter, its highest level since 2021, with formal employment accumulating five consecutive quarters of declines. What the most recent labor data reveal is a fracture in quality: those who find work increasingly access formal positions —58% of those exiting unemployment today land a formal job, versus 42% a year ago— but the total outflow from unemployment has decelerated, with the weekly probability of finding any job falling from 5.0% to 4.3%. Informal employment, which used to act as a cushion, has stopped absorbing. Adding to this is a data point that the dean of the School of Business and Administration at Universidad Autónoma calls structural: 184,033 people have been looking for work for at least twelve months, 18.8% of total unemployed, with an average search time of 8.1 months, the highest non-pandemic reading on record. Hysteresis is no longer a theoretical threat; it is a measurable reality. Layoffs due to company needs showed a 4.2% drop in the first half —the first in five years— but economists warn that figure is not a sign of recovery but of firms that have already completed their payroll adjustments.

Against this backdrop, the Kast government's first budget takes on considerable political weight. With public spending growth capped at a maximum of 1% real for 2027, the budget Hacienda is preparing also includes an agenda targeting "social fraud" and a review of permanent expenditures that promises to strain the discussion in Congress. Simultaneously, the Finance Ministry is moving at an accelerated pace on its capital markets reform, which would enter Congress next week and whose centerpiece is the creation of a state-guaranteed mortgage financing fund, administered by BancoEstado, that would issue debt at rates close to those of the Treasury to finance new housing loans. Banco de Chile's general manager, Eduardo Ebensperger, called the initiative "a very positive push" and noted that capital accumulation accounts show signs of greater investment appetite in the private sector, though he acknowledged that current growth figures are "bad" and that July's Imacec, which fell 1.5%, represents one of the year's harshest readings. His projection: 2026 closing around 1% growth and a recovery toward 3% in 2027.

In the pension market, the Superintendencia de Pensiones published the definitive investment regime for the generational funds that will replace the current multi-funds starting April 1, 2027. The AFPs welcomed the changes relative to the initial July proposal, particularly the greater flexibility incorporated. LarrainVial anticipated that the new scheme will generate buying flows in corporate fixed income and selling in government debt and local equities, without significant changes in the aggregate valuation of domestic assets. Fintual co-founder Omar Larré confirmed that, with the entry barriers presented by the original proposal now cleared, the firm will bring the initiative to become an AFP before its board in the United States.

In the electricity sector, Grupo CAP's decision to put its transmission lines subsidiary up for sale adds to a trend of divestment in electrical infrastructure assets by industrial groups seeking to concentrate capital in their core businesses. The move comes just as Transelec CEO Arturo Le Blanc confirms that the Chinese shareholder's attempt to take control of the company "is no longer going forward," underscoring the company's strength in attracting investors. In renewables, Spain's Grenergy closed the sale of the fourth phase of its Oasis de Atacama project for US$475 million to CVC DIF, completing a portfolio of 272 MW of solar and 1,100 MWh of storage in northern Chile.

Next week will concentrate several catalysts: the formal submission of the capital markets reform to Congress, progress in negotiations with DC lawmakers that Undersecretary Quiroz began this week, and the impact that the evolution of the Hormuz conflict has on the exchange rate and Fed monetary policy expectations. A dollar sustained above $940, combined with rising external interest rates, would complicate the mortgage financing scenario Hacienda is trying to cheapen with its reform, turning Persian Gulf geopolitics into a variable directly relevant to Chile's real estate market.