Global Stock Market Decline: Impact of Chinese Services Sector and Bci Capital Increase

2023-07-05 20:57:00

Global stock markets lost ground on Wednesday following a survey of the services sector in China that worsened growth prospects globally, while in the Chilean market, the fall of Bci following the call for a capital increase released yesterday by the bankamid special dynamism in light of the imminent end of the Takeover Bid (OPA) process launched from Brazil for the shares of Itaú Chile.

The S&P IPSA national index fell 1.0% to 5,835.13 points at the end of the operations in the Santiago Stock Exchange, following having closed yesterday at its all-time high. And 21 of its 30 stocks closed in the red, including SQM-B (-2,58%).

Bci (-2,62%) led the falls within the IPSA following announce that it will propose to its shareholders a capital increase of more than US$ 750 million. The Yarur family bank has a value close to US$ 5,072 million.

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“Bci’s capital increase causes noise in the sense that, if one distributes the US$750 million, around US$475 million would have to be subscribed by the controlling group. The AFPs, if they maintain the same position they had as of December 31, 2022, they would have to subscribe around US$65 million, and US$210 million would have to be subscribed by the remaining 28% belonging to minority shareholders,” wrote Vector’s equity trader Capital, Jorge Tolosa.

“This may have an impact on the valuation of many papers on the Chilean stock market, given that if there is interest in subscribing this capital increase, it may encourage investors to go out and sell shares of other companies, but we are still very early of that process,” he added.

In other banking industry news, Itaú Chile fell 0.58% to $8,550 per share and was the most traded paper of the day with flows of close to $27 billionfollowed far behind by SQM-B’s $12.5 billion.

On the last day of the OPA process launched by Itaú Unibanco from Brazil, LarrainVial opened a purchase power by a group of local investors to acquire 4 million Itaú shares at a price of $8,550 per share$50 more than the one offered by the Brazilian controller.

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external markets

The Dow fell 0.38%, the S&P 500 lost 0.2% and the Nasdaq fell 0.18%. on the New York Stock Exchange, which returned to the ring following yesterday’s holiday for Independence Day in the United States.

In Europe, the regional Euro Stoxx 50 index fell 0.92% and London’s FTSE 100 lost 1.03%. Earlier, at the close of the Asian stock markets, Hong Kong’s Hang Seng contracted 1.57%, mainland China’s CSI 300 fell 0.77% and Japan’s Nikkei fell 0.25%.

The general spirits were depressed following learning in China that the confidence index for the services sector prepared by S&P/Caixin fell to 53.9 points in the June readingbeing the lowest level since January and recording its biggest month-on-month drop since September.

Later this followingnoon,the Federal Reserve released the minutes of its last monetary policy meetingwhichrevealed discrepancies between officialsat the time of discussing the decision where they ended up converging in voting in favor of maintaining the official rate following 10 consecutive adjustments.

“Some participants indicated that they were in favor of raising the target range for the federal funds rate by 25bp at this meeting or that they might have supported such a proposal,” the minutes say. Market rates responded with hikes that soon faded.

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