Buy Chilean Banks As Far-Right Kast Thunders Toward Landslide Electoral Victory

Chilean stocks rallied 30% in 2025 and should do even better in 2026.

Summary

• Chilean equities, especially Banco de Chile, are poised to rally as conservative candidate Jose Antonio Kast is overwhelmingly favored to win the presidency.

• Current polling misleads foreign investors; right-wing candidates collectively have a huge lead which will become apparent after November’s first round vote.

• A Kast presidency, combined with high commodity prices, sets the stage for 5%+ annualized GDP growth and outsized equity returns.

• Banco de Chile is my favorite way to express this trade.

• Also: other U.S.-listed Chilean stocks, the Nuam exchange, and betting on the election results outright.

Chile votes for president on November 16th.

Assuming no one wins outright (spoiler alert: no one will), the election will proceed to a runoff between the top two candidates on December 14th. The next Chilean president will be inaugurated in March.

I am publishing this piece today because international investors have failed to appreciate just how overwhelming the odds are in favor of conservatives this election.

We will see a rally in Chilean equities around the election as people catch up to the news. The question isn’t what’s going to happen, but rather, how big the rally will be once folks finally react to the news.

For reference, I appeared on a betting podcast, Star Spangled Gamblers, in an hour-long show where we focused exclusively on the upcoming Chilean election. My analysis from that appearance holds, as there haven’t been any dramatic changes in the race since that point. If you want to hear me talk through the election with a very capable and informed post asking me solid questions, I would refer you there.

Putting My Money Where My Mouth Is

The host asked me for my assessment on the Chilean election betting market. As a gambling podcast, that’s where their listeners’ alpha is.

At the time we recorded, frontrunner Jose Antonio Kast was trading around 65%-70% to win. The host asked if I felt that was too high, too low, or just right.

As crazy as it sounds to be making high confidence threshold predictions ahead of the first round of a LatAm election, I said that Kast seemed materially underpriced and I liked his odds up to 80% to 85%.

Ultimately, given that gap between my perception and the market odds, that creates an interesting trading opportunity, both in terms of the election bet directly and on the subsequent impact on Chilean financial assets.

This is an equity-focused publication, so most of my comments here are on Chilean stocks. But it’s fair to say I’m bullish on Chilean bonds and currency for the same factors described in this piece.

After appearing on the podcast, I also decided to put some personal stakes to my prediction as well, with a $710 bet that Jose Antonio Kast will win the presidency. This will pay out $1,000 if and when he wins:

Chilean election odds on Kalshi, as of October 2nd.

If an event has 85% odds of happening and you can bet on it at 70%, you are getting excellent expected value; if you make that bet over and over on a bunch of uncorrelated markets/outcomes, you will be a highly successful bettor/investor.

Let’s get into why Kast is so heavily favored and how many foreign investors are (mis)understanding the race at this point.

The Polls Are Asking A Different Question Than You Think

From my consumption of English language media, the clear misconception is that the Chilean election is close because the polls seem to show a tie. The polls, however, are asking who are you going to vote for in the first round.

The aggregation of recent first round polls has the communist candidate, Jara, around 27%, Kast at 23%, Matthei at 15%, and Kaiser at 11%, with no other candidate being in the double digits. If you just read the topline, Jara, the communist, is slightly ahead. So, isn’t there grave danger? As the betting market screenshot shows, however, despite the apparent polling lead, Jara is a longshot to win.

The difference here is that the left-wing had a primary, the conservatives did not.

Chile’s liberals held a primary this summer which consolidated their support across the spectrum from center-left all the way out to the communists. As it turns out, the actual communist candidate, Jara, won that primary and is now the flag-bearer for Chile’s left-wingers. Jara is an unremarkable figure (she lost a race to be mayor of her hometown in 2021 -- quite the jump from unsuccessful mayoral race to national ambitions in just four years.

She did serve as Labor and Social Welfare minister for the current president, Gabriel Boric. She also did some press spokeswoman work for the Boric Admin. However, the incumbent president is dramatically unpopular so it’s unclear being a functionary of that administration is a winning electoral path.

Who wants four more years of that? Not many Chileans, apparently.

That current president, Gabriel Boric, is a young (39 years old after serving out his term) left-wing socialist who was elected on a hope over experience campaign. He tied his messaging to a reform effort to eliminate Chile’s Pinochet-era constitution and replace it with a more liberal one.

However, the constitutional reform movement sunk like a lead balloon with voters, as a national referendum rejected it 62% to 38%. Boric had to pivot to the center and his government failed to accomplish much of anything following the failed constitutional reform. Nearly 60% of Chileans now think the country is going in the wrong direction:

Jara has been unable to build a coalition in the effort to carry on Boric’s government given her lack of electoral experience or anything that would make her seem more credible than Boric was. Chile already voted for a lightweight leftist in 2021, they are unlikely to repeat that in 2025.

This explains why Jara’s candidacy hasn’t picked up steam with voters, in fact her polling support keeps inching lower in recent weeks.

However, because she is the representative of the whole left/liberal/communist spectrum, she has a hard floor of support that will come out for any left-winger out of opposition to the various right-wing alternatives.

As long as foreigners glance at tweets that show Jara as the nominal polling front-runner they are unlikely to go rushing into Chilean stocks.

Thankfully, come November 16th, the right wing will consolidate to one candidate, and we’ll start seeing polls that are much closer to 55% [conservative], 35% Jara, 10% undecided rather than the current polls which show Jara nominally leading the whole collection of right-wing aspirants.

Kast & The Other Right-Wing Alternatives

Jose Antonio Kast came in second in Chile’s 2021 presidential election. He has used that run as a springboard to become the clear frontrunner for the right-wing this time around. In 2021, Kast was campaigning as a far-right candidate embracing much of the Trump/Bukele populist rhetoric. Kast also offered a far more approving view of Chile’s Pinochet regime than was viewed as prudent at that time (Pinochet transformed Chile from being South America’s poorest to wealthiest country within 20 years, but he gravely abused human rights in the course of implementing his militant capitalist ideology.)

In 2021, Kast was viewed as extreme. And he was attempting to follow on the heels of an unpopular Chilean conservative government. There was a broad anti-incumbent feeling across the world electorate at that time, so any Chilean conservative was going to face a challenge due to headwinds from COVID-19 and so on.

Now, though, Kast can message that Chileans voted wrongly in 2021, picking the inexperienced youth activist to be president. Boric was in over his head and made a mess of the presidency.

As per Kast (translated):

“Don’t be fooled: The upcoming election is about change, or continuity. This [Boric] administration has been a complete failure, and there is nothing to salvage.”

Today, Chileans, according to Kast, get a second opportunity to make the right choice, putting in a forceful older right-wing leader who is willing to embrace the tough decisions necessary to crack down on crime and get Chile’s economy out of its decade-long stagnation.

Speaking of crime, Kast’s iron fist messaging is perfect for the moment as Chileans are currently outraged about crime, immigration and narcotrafficking.

Meanwhile, issues where Jara is strong, like healthcare and income inequality, are not top concerns:

Kast’s other big advantage this time is that he’s more in the center of the conservative options rather than being the most extreme one.

That’s because of the rise of Johannes Kaiser, a far-right/libertarian figure that started on as an online influencer inspired by the Ron Paul movement in America. Kaiser has taken even more aggressive stances on many hot-button issues than Kast has, meaning that Kaiser has pushed the Overton Window out farther to the right in Chile. This leaves Kast looking like a more experienced, practical, and electable alternative. For what it’s worth, at least judging by the recent presidential debate, Kast comes off as a better speaker than Kaiser as well.

And to Kast’s (relative) left, you have Evelyn Matthei, who is more a traditional old-school styled conservative who hasn’t heavily leaned into fiery rhetoric or right-wing populism. She’s an economist by training and emphasizes using public institutions and rule of law to make gradual rightward economic change. Matthei, if president would be no hard right firebrand, but she’d offer the sort of steady traditional pro-business approach to governance that would be perfectly fine for investors. Not hugely inspiring, perhaps, but predictable center-right leadership would be well-received after four years of Boric’s socialism-lite.

Put bluntly, Kast came off as too extreme in the 2021 campaign. Now he has a rival -- full name: Johannes Maximilian Kaiser Barents-von Hohenhagen, for good measure -- to make Kast look like a reasonably pragmatic choice by comparison. Meanwhile, in Chile’s more partisan environment, I doubt voters are going to be fired up to vote for a traditional more laidback conservative like Matthei.

As a final point here, Chile enacted compulsory voting this year. There will be a fine of between $35 and $105 for anyone who doesn’t comply with their legal duty to vote.

This adds some uncertainty to the race, to be sure.

However, polling within Chile has found these previous non-voters tend to be more conservative than the electorate as a whole and prefer populist over neoliberal messaging. Translation: This benefits Kast and Kaiser while hurting Matthei. Chilean voters still have the option of voting null (turning in a blank ballot) to avoid the fine; regardless a lot of these lower information, not very interested voters will pick one of the populist right candidates. I’ve seen several estimates saying this should add a few points to Kast and/or Kaiser support on net.

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I discussed the individual candidates and their ideologies in a lot more depth on the Star-Spangled Gamblers podcast, so I’d recommend that if you want more context there.

For our sake today, however, the cliff’s notes is that the left-wing had a structural advantage in Chile in 2021 due to the pandemic and the previous right-wing government’s missteps. However, Kast still came in second in that election and now the candidate he lost to ended up squandering his term. Kast is set to improve dramatically on his 2021 showing. And thanks to Kaiser’s rise, Kast can position himself as a sensible choice against an even farther right-wing alternative.

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Let’s get into the financial implications though. How are we going to make money on this Chilean election?

Right now, first round polls are roughly as follows:

• Jara (communist): 27%

• Kast (far-right): 23%

• Matthei (right): 15%

• Kaiser (far-right): 11%

• Parisi (center): 8%

• Other candidates: 5%

• Blank/spoiled ballot: 11%

Right now, betting markets are around 50/50 as to whether Jara will win the first round or whether one of the right-wing candidates will. Let me be clear: I expect Jara to have a slight plurality when the first round votes are cast in November. That is to be anticipated and not anything to worry about.

Just add up the numbers for the right-of-center candidates.

Kast + Matthei + Kaiser alone are 49% of the first-round vote intention. Near outright majority already.

Moving down the list, Parisi came in third in Chile’s 2021 election.

After his first round loss, he endorsed Kast in the run-off. While Parisi is no solid right-winger, I’d guess at least half his voters go to Kast (or another conservative) in the run-off. There are a couple of other minor candidates polling in the low single digits range; I would expect their votes -- in aggregate -- to split fairly evenly between Jara and Kast in the run-off.

So we’re looking at something like 55% for the right-wing and 35% for Jara after adding up the vote totals from the various first round candidates, with the rest being undecided or intent on spoiling their ballots.

The moment you get the first set of head-to-head polls, you’ll have Kast (or Matthei) polling over 50% and Jara in the 30s. Markets should, at that point, realize that this is going to be a landslide, not a horse race, in the run-off.

You can adjust these numbers a bit to your liking if you don’t trust the polls or whatnot. Regardless, the structure of this race so aggressively favors the right that the conservative candidate would have to run an historically inept race to squander this advantage.

Could Kast Lose To One Of The Other Right-Wingers?

The one place I could lose my bet on Kast specifically is if Matthei manages to clip Kast in the first round. Remember, it’s the top two vote getters that advance to the run-off. Jara is exceptionally likely to get one of those spots, and it’s plausible that Matthei (or perhaps Kaiser if things really get wild in the final weeks) edges out Kast for that other spot in the runoff.

Here’s all the polls for the Chilean election over the past month:

Jara and Kast have been the top two candidates in every single one of these polls. That said, Matthei has polled above 19% in three of these polls while Kast consistently gets 25%. If polls are off by 5-7%, it’s not unthinkable Matthei could squeak past Kast and take the spot in the runoff.

However, there’s no world where Jara’s 25-30% support plus half of Parisi’s vote gets her anywhere near 50%+ to win the runoff. Jara is drawing dead here unless the polls are way off on her support.

If anything, if Matthei wins the first round over Kast, the end result would be even more of a landslide, as Matthei is likely more palatable to Chile’s centrist/independent voters than Kast.

If you’re the Jara campaign, your best hope is somehow Kaiser surges and narrowly gets into the runoff. In that case, perhaps you can make the argument that the far-left extreme is slightly more acceptable to Chilean voters than Kaiser’s unorthodox takes from the extreme other end of the pendulum.

As of the polling we have now though, this is almost certainly heading to a Kast v. Jara or Matthei v. Jara runoff and either right-winger will be the prohibitive favorite once that occurs.

After The Election: How Traders Will React

Once we wake up on Monday November 17th and the investment banks start publishing their reports saying that Kast is heading for a landslide in victory in the Chilean runoff, things start to get interesting.

At that point, it becomes blindingly obvious that Chile will have a new and audaciously pro-business government coming to power at the beginning of 2026.

And unlike the prior Chilean conservative government (2017-21), this one will have a much better shot at making a real economic impact.

That prior Chilean government had the misfortune of being in power at a time when commodity prices were through the floorboards. Throw in the pandemic to further disrupt things, and that government failed to deliver whatsoever on its economic promises. Hence the socialist president who was subsequently elected in 2021.

However, this new conservative government, led by Mr. Kast, will take over with key Chilean products like gold, silver, and copper sitting near all-time high prices. Keep in mind that the Chilean government has a huge economic interest in the nation’s copper mines and uses those profits to fund a wide range of economic development and social programs. An elevated copper price leads to dramatic trickle-down benefits across many parts of the Chilean economy.

Beyond high metals prices, Chile’s competitive position is improved due to geopolitical tensions elsewhere. For example, the Russia/Ukraine war took a lot of foodstuffs off the market, thus providing pricing support for other leading agricultural nations like Chile.

There’s an additional unique wrinkle here for Chile.

The country benefits from a position of strategic ambiguity amid the current trade wars. Chile is not a close ally of China, the U.S., or Europe, meaning it is a free agent that can seek to play the various global economic blocs off each other when negotiating trade.

This is a stark contrast to, for example, Mexico. Mexico sells 80% of its exports to the U.S. Mexico’s tourism industry is also overwhelming reliant on American and Canadian visitors. Mexico can’t credibly threaten to pull out of the USMCA free trade bloc. China doesn’t need Mexican manufactured goods and there are too many cultural and tourism ties between Mexico and the U.S. for them to go their separate ways.

Similarly, Colombia has been the U.S.’ closest ally in South America for 35 years now. Colombia’s exports (primarily energy goods) are closely tied in to U.S. refining and petrochemical capacity as well; it’d be a serious blow for Colombia to try to move its exports elsewhere.

By contrast, Chile is not closely aligned with anyone. It is geographically farflung, Santiago is a long plane trip to just about any major economic center, meaning it isn’t a core part of anyone’s economic bloc (unlike Mexico). And Chile has been open about selling its wares to the highest bidder for a while now; it can credibly step back from trade with the U.S. and its allies and pivot to Asia (or Europe) as needed. And with large volumes of exports in crucial minerals along with in-demand fresh and frozen foodstuffs, Chile has high value exports across the board.

Chile has stayed out of the line of fire as far as the 2025 U.S. tariffs have gone (unlike regional peer Brazil which is enjoying 50% tariffs on its goods due to Brazil playing the pro-BRICs/anti-US Dollar card a little too aggressively). While Chile maintains good relations with the U.S., it can also be an appealing partner for China or other highly-tariffed countries if the U.S. trade drama persists through the remainder of Trump’s presidency.

I remain upbeat on both Mexico and Colombia over the long term. That said, those countries pretty much have to stick with the U.S. as their closest ally regardless of what America does; they don’t have much flexibility there.

Chile has a unique position here where it is much closer to a pure neutral and, like Switzerland in Europe, Chile can potentially harvest the benefits of being a well-respected non-combatant amid the global trade war.

How Much Will Chilean Stocks Go Up Next Year?

The most obvious way to play the Chilean stock market is to simply buy the country ETF (NYSEARCA:ECH). Chile is up 30% in dollar terms year-to-date (we’ve been bullish on the country all year at this publication, so far so good). Regardless, even with this year’s bounce, Chile remains far closer to the lows than the highs on a 20-year basis:

Data by YCharts

I think the ETF is a reasonably good product. There’s more diversification here than in many emerging market country ETFs; it isn’t just banks, energy, and basic materials like you tend to see in so many emerging market countries. There are indeed some companies here such as retailers, a real estate name, and even an airline in the ETF which have more domestic economic exposure than you tend to see in many emerging market ETFs.

However, my largest position in Chile, and the one we added to the aggressive portfolio earlier this year, is Banco de Chile (NYSE:BCH). BCH is the largest player in the Chilean banking space.

To the inevitable reader question, sure I’d be fine with owning Banco Santander Chile (NYSE:BSAC) as well. That said, BCH is larger, has slightly more liquid options available, and has performed better over the decades:

Data by YCharts

I don’t see any real reason to overthink the BCH vs. BSAC question, just pick the bigger one with better historical performance when the trade is an election catalyst rather than anything company-specific.

The issue with Chilean banks recently has been a lack of any domestic loan growth. The economy has been stagnant since commodity prices tanked in the early 2010s. And things haven’t picked up yet, despite the surge in metals prices now, because President Boric has been deeply unpopular and business leaders are waiting for Kast to take over before they commit new capital to projects.

Long story short, Banco de Chile has grown both gross loans and net interest income by less than 1% per year annualized since 2015. Thankfully for investors, it has maintained an ROE around 20% in recent years (this is a well-run franchise) which has allowed to deliver decent shareholder returns despite the total lack of growth. Needless to say, however, everything here gets better if and when Kast takes over, Chile starts printing +5% annual GDP growth figures, and Banco de Chile can start growing the loan book at 8-10% a year like the old days.

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It’s not too hard to imagine investors getting the message that a new era has dawned in Chile, and we see a sizable and sustained bid for these equities.

Mexico and Brazil are the only reasonably large LatAm equity markets. The rest are tiny. To that point, Banco de Chile is the largest company in the local market, yet it has a pedestrian market capitalization of $15 billion. By contrast, companies like America Movil, Walmart Mexico, Nubank, and Petrobras all have market caps north of $50 billion.

For another data point, the ECH Chile ETF has about $750 million in assets. Compare that with Brazil at more than $5 billion. An improvement in money flows into a tiny market like Chile can create proportionally bigger moves than in a larger emerging market.

The quintessential example of this would be Colombia, which emerged from an economic crisis in 2002 and enjoyed leadership from a militant right-wing pro-biz president (Uribe was elected in 2002) that ultimately crushed FARC and ended the civil war. Under Uribe’s leadership, Colombian stocks doubled in 2003. Colombian stocks doubled again in 2004. In 2005, not be outdone, they doubled for a third straight year. In all, it was a 10x run in three years. By the end of the 2000s, Colombia was arguably one of the world’s single most overvalued equity markets. Bancolombia shares went from $2 to $65. Big money flows into small market can equal nutty bull runs.

Is something like this about to happen in Chile? You’ve got Kast, a far right president who pushes the right buttons in terms of revitalizing the economy and smashing crime, just as Uribe did in Colombia during its historic 2000s run. And you have an incredibly favorable commodity market setup for Chile, along with Chile’s perfect positioning for a prolonged global trade war.

Other Listed Chilean Stocks

That concludes the bull case for Banco de Chile specifically.

Let’s take a lightning round for the few other U.S.-listed Chilean assets.

I do have positions in the U.S.-listed Chilean beverage companies, namely brewer and wine producer Compañía Cervecerías Unidas (NYSE:CCU) along with soft drink bottler Embotelladora Andina (NYSE:AKO-B). These are both in my buy-and-hold portfolio rather than being active trading positions.

While I see both companies as undervalued (particularly CCU with the recent dip), they probably aren’t going to move nearly as much on an election/positive sentiment for Chile as other things. Consumer defensive names to be much less economically sensitive.

Note also that neither is a top 10 holding in the Chile ETF. So, if some fund wants to throw a few hundred million dollars at Chile after they see the election results, much less of that money will trickle down to the smaller holdings in ECH as opposed to something like Banco de Chile which makes up 12% of the ETF.

For the mining companies, obviously there’s going to be a lot of interest with the new government. Particularly true for the junior miners with projects in Chile.

This isn’t a newsletter that covers mining companies in any great detail, I’d refer you elsewhere for detailed industry expertise. What I will say, however, is that Chile has remained quite mining friendly even under Boric’s socialist government. In the incredibly unlikely event that Jara won the presidency, even she has had reasonable rhetoric on natural resources as opposed to taking a blanket oppositional stance against the industry (i.e. Petro in Colombia).

The next president of Chile will be more favorable to the mining industry than the current one. But it’s not like the current outgoing president was the worst thing ever for the industry. So, I would temper your enthusiasm a little bit -- at least in terms of the actual on the ground changes in permitting and so on. That said, if gold and silver are still at record highs when the election news hits and you get bombastic headlines in the English language press about how Chile is the new El Dorado for natural resources investors, perhaps Chilean mining names absolutely rip.

As for lithium names like SQM (NYSE:SQM), I don’t see it as a great election proxy. As the chart below shows, SQM tends to march to its own drum rather than being especially correlated to Chile’s economy:

Data by YCharts

The main issue with the lithium names has been oversupply and the plunge in Chinese lithium demand. The outlook for lithium is based on things such as the pace of EV adoption and how government incentives for the industry evolve over time. SQM’s outlook has very little connection to domestic Chilean affairs aside from any changes in government regulation.

SQM is a large holding in the Chilean ETF, so if you want a bit of exposure you get that via the ETF. That said, I wouldn’t buy Chilean lithium outright as an election trade.

Enel Chile (NYSE:ENIC), the power utility, is also listed in New York and should have a decent amount of correlation to the Chilean political situation/economy. I tend to prefer banks over utilities for emerging market exposure. ENIC stock is already near multi-year highs. It should go higher on the election news, but I see more upside for the banks.

Finally, what about local stocks not listed in New York?

Great, if you can get access to them!

The Chilean, Peruvian, and Colombian stock exchanges now have one unified owner, called the Nuam regional exchange (Santiago:NUAM, Bogota:NUAM). If you have a brokerage account in one of these countries, you can trade those local markets. However, Nuam remains unavailable to retail investors outside of South America; it’s not listed on Interactive Brokers or any of the other international retail platforms. Unless you’re willing and able to travel to Bogota, Lima, or Santiago and set up an account in-person, it’s virtually impossible to trade local Chilean-listed equities. So I won’t spend time here writing up individual Chilean equities that 98% of readers don’t have access to.

For what it’s worth, Nuam itself (the stock exchange) is listed and is very cheap. And it is in prime position to benefit from the new conservative governments in both Colombia and Chile. But as far as I know, there’s no pink sheets U.S. listing of it, so it is off-limits to most investors as well.