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Chile presidential primary results surprise the market

(Bloomberg) – Financial markets are likely to cheer for the unexpected victories of former student leader Gabriel Boric and former Government Minister Sebastián Sichel in Chile’s presidential primary elections on Sunday.

Boric won the far-left vote with 60.4% of the support, beating Communist Party candidate Daniel Jadue, who scared the financial markets with calls for radical economic reform. Sichel won the victory among four contenders on the right with 49.1% of the vote, defeating Joaquín Lavín, one of Chile’s best-known politicians. Both candidates will now advance to the first round of the November 21 presidential election.

The result will provide some relief to financial markets, as Boric is considered to be more moderate than its competitor, while Sichel advocates keeping the market-friendly economic pillars intact. It is also a new blow to Chile’s traditional parties amid persistent social unrest. Taken together, the election offers investors a glimpse of the balance of power between the political left and right ahead of a presidential election that remains open.

About 1.7 million votes were cast in the far-left primaries, while more than 1.3 million voted in the right-wing contest, according to the government’s electoral service, Servel. 21% of those eligible to vote participated in the primaries.

Young politician

Boric, 35, is a prominent member of a new generation of lawmakers who has shaken Chilean politics. He became known in 2011 while leading nationwide protests calling for free, quality education.

He successfully ran as a lower house deputy in 2013 and was later re-elected to his second term in a landslide vote. More recently, Boric helped forge a political agreement for a referendum on the nation’s Constitution.

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“Do not be afraid of the youth to change this country, because we also drink from the experience of those who fought before us,” Boric told his supporters Sunday night. “If Chile was the cradle of neoliberalism, it will also be its grave.”

Sichel, 43, has tried to broaden his appeal by running as an independent candidate while strengthening his ties with conservative parties. In 2018, he was hired to help run the economic development agency Corfo and later commanded the Ministry of Social Development, where he helped establish an emergency cash transfer program for poor families.

Chile’s economic model can be improved from within and does not need radical reform, Sichel said in an interview last month. He has called for boosting cash transfers and improving public services.

“We are a coalition that is preparing to win the presidential election,” Sichel told his supporters, “because we feel that the project we represent for Chile, of justice and freedom, is the best project for Chileans.”

Other candidates

Numerous public opinion polls conducted in June showed that both Boric and Sichel were second in their respective primaries.

Both candidates could also be challenged by other names in November. The traditional center-left parties that ruled Chile for much of the last 30 years after the end of the Augusto Pinochet dictatorship did not present candidates for the primaries, but they could participate in the presidential race.

Within this group, the former spokesperson of the Government Paula Narváez, of the Socialist Party, has already launched her candidacy. Senate Speaker Yasna Provoste, who is from the Christian Democratic party and consistently ranks high in polls, could also run. The presidential race is likely to reach a runoff in December.

Chile’s next head of state will oversee the rewriting of the Constitution and a national referendum on the document. The winner will also face challenges such as increased debt stemming from emergency aid during the pandemic and demands for higher social spending after the 2019-2020 social unrest.

Original Note: Underdogs Score Surprise Wins in Chile Presidential Primary (1)

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