(Bloomberg) -- Chilean stocks tumbled, heading for the biggest drop in eight months, after an 8.8-magnitude earthquake killed at least 700 people, severed the country’s main highway and damaged 1.5 million homes. The peso pared its loss after weakening as much as 1.5 percent.
Empresa Nacional de Electricidad SA, the nation’s biggest power generator, and Lan Airlines SA, the country’s biggest carrier, dropped following electricity outages and airport closures. Ripley Corp. SA, Chile’s third-largest department store operator, slumped lost 2.9 percent. Antarchile SA, the forestry and energy holding company owned by Chile’s Angelini Group, plunged 5.5 percent.
The Ipsa dropped 2.2 percent to 3,741.78 at 8:41 a.m. New York time, the biggest retreat on a closing basis since June 22. Chile’s peso slid 0.4 percent to 526.65 per U.S. dollar, recovering from an earlier plunge.
“Initial reaction for stocks will be negative,” said Eric Conrads, a hedge fund manager at Armada Capital SA, a Mexico City-based Armada partnership with ING Investment Management that oversees $12 billion in emerging markets, said in an interview yesterday. “Medium and long term Chilean equities will resume their rally.”
Copper jumped to the highest price in five weeks in London after the quake cut supplies from the world’s largest producer. Chile’s benchmark 10-year peso bond yield fell to the lowest since the end of October. Roads and airports were shut due to damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc.
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