Chile’s ETF Gains Momentum on Lithium Sector Clarity and Policy Support

iShares MSCI Chile ETF US4642866408

A combination of judicial resolution and supportive monetary policy is providing a significant tailwind for the iShares MSCI Chile ETF. The fund, which offers exposure to Chilean equities, is benefiting from reduced political risk and a clearer growth trajectory, particularly within its heavily weighted materials sector.

The Chilean Central Bank (BCCh) has contributed to a favorable environment for local assets. On January 27, 2026, its governing council unanimously voted to maintain the benchmark interest rate at 4.5%. Analysts noted the central bank's communication signaled a relatively accommodative stance. With inflation trending toward the 3% target, market participants are now anticipating a potential rate cut as early as March.

This stable monetary policy is seen as supportive for the Chilean peso and improves the valuation outlook for domestic stocks, particularly in the financial and materials industries. This backdrop has aided the ETF's performance, which has delivered a year-to-date return of approximately 15% in 2026.

Landmark Court Decision Resolves Key Lithium Uncertainty

A major overhang for the market was removed by Chile's Supreme Court on January 26, 2026. The court dismissed an appeal filed by Tianqi Lithium, thereby concluding years of legal uncertainty surrounding the strategic partnership between mining firm SQM and the state-owned company Codelco. This ruling allows their joint venture, "Nova Andino Litio," to proceed as planned with managing lithium extraction in the Atacama Desert through 2060.

This development carries substantial weight for the iShares MSCI Chile ETF, where SQM is the largest holding with a portfolio weighting of roughly 14.40%. The establishment of long-term operational certainty for this cornerstone asset reduces political risk and provides fundamental stability to the fund's valuation.

Mining Sector Reset Underway

The current administration is pursuing a more market-friendly strategy aimed at streamlining permitting processes and enhancing legal certainty for foreign investors. Beyond the core Atacama project, the next major initiative is already advancing: the Maricunga lithium project. The partnership structure between Codelco (50.01%) and Rio Tinto (49.99%) highlights Chile's intent to diversify and expand its capacity as a supplier for the global energy transition. The confirmed readiness to sign the operating contract for Maricunga on January 28 marks another concrete step in this strategic growth plan.

• Current Price: €39.30
• 52-Week High: €39.37 (reached on January 24, 2026)
• Technical Note: The 14-day Relative Strength Index (RSI) stands at 76.2, indicating a potentially overbought condition in the short term.

Alongside SQM, other significant contributors to the ETF's performance include LATAM Airlines (11.90%) and Banco de Chile (11.78%). The foundations for more stable commodity production appear to be set. The market's focus now shifts to the central bank's next monetary policy report in March, which will signal whether officials are preparing the ground for further interest rate reductions.