Chile ETF Falls On Copper Weakness, Economy

Nov.18.11 | About: iShares MSCI (ECH)

An exchange traded fund that invests in Chilean stocks has lost ground this week along with copper prices. Also, data released Friday showed Chile’s economic growth cooled in the third quarter.

Chile is the world’s largest copper producer. The red metal’s price has taken a hit this week on concerns Europe’s debt crisis my slow the global economy.

The iShares MSCI Chile Index Fund (NYSEARCA:ECH) was down fractionally on Friday. The fund offers exposure to copper companies, which are the top holdings in the portfolio. Chile is responsible for one third of the global copper supply. The country’s currency, the peso, is tied to the price of copper.

Chile’s economy grew at a 0.6% rate in the third quarter from the second quarter, but rose 4.8% from the year-ago period.

The fact that Chile is a major supplier of copper works for and against the country’s economy. While much of the economy and ETF have garnered gains during times of higher copper prices, any reduction or drop-off in demand of the metal is going to have an impact. The economy is very dependent upon copper so that any drop in price hurts the country and its banks.

iShares MSCI Chile Index Fund

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Tisha Guerrero contributed to this article.