User 164425

Shorting Chilean ETF: Energy Crisis 'Confirmed'

I disagree. Most copper production is on the northern grid which is not affected by the supply issues. Future copper demand is a big question mark too. So even with supply issues its not a surefire trade going long copper.

Regarding power, this is a capacity issue and not related to lack of natural gas or the price of diesel. While diesel costs more, most generators have been running on diesel since 2004. The ones that are going to be squeezed are the ones that can't pass on the higher costs notably some with long term contracts in the northern grid and the ones like colbun whose reservoirs are critically low and rely alot on hydro generation, so shorting powercos across the board is not a good idea. Alot of thermal capacity is coming online in the second half of the year and the LNG terminal should be starting up at the beginning of 2009 so there is the problem of deciding how to value companies based on a short-term disruption, and betting on how the market will value them in the short-term based on the long-term fundamentals.

So, fundamentally I disagree. I think its a mistake to short the CLP right now and I'd rather hedge usd holdings by going long chile, maybe with BCH or SAN. Unless you know alot about the issues at hand its way to easy to be on the losing side of this.