Copper hits record high while Fitch warns Chile's debt threatens credit rating.

Copper hit a new all-time high on international exchanges today, but the euphoria surrounding Chile's flagship export commodity comes wrapped in a fiscal warning that cannot be ignored: Fitch Ratings has just signaled that if Chile's public debt continues to climb above 45% of GDP, the country's A- sovereign rating would face a real risk of downgrade. This is the day's central tension — a Chile that shines in commodity markets yet accumulates structural vulnerabilities that no copper rally alone can resolve.

The red metal traded at fresh highs on both the London Metal Exchange and the New York Comex, partly driven by expectations that the U.S. Department of Commerce could broaden copper tariffs to include a wider range of the raw material. As ING noted, that prospect is "a double-edged sword for the Chilean peso": a broader tariff could push copper prices higher in the U.S. market and offer temporary benefits to exporters, but it also introduces distortions in trade flows that complicate long-term planning. The local dollar closed near $915, with a moderate uptick that halted recent declines despite the metal's momentum, reflecting the ambiguity surrounding this tariff scenario.

Against this backdrop, the words of Todd Martínez, co-head of Sovereigns for the Americas at Fitch Ratings, take on particular urgency. At the Fitch On Chile conference, the analyst indicated that public debt stood at 43.1% of GDP at the close of the second quarter — dangerously close to the self-imposed 45% ceiling — and that without a stabilization plan "there would be a risk" for the sovereign rating in the medium term. Martínez was skeptical of the government's sweeping tax reform, whose direct fiscal impact he estimates at 0.5% of GDP, and questioned both the Executive's capacity to execute the US$6 billion in committed spending cuts and the structural soundness of those measures in a country that is aging and has clearly expressed its preference for a broader welfare state. Copper and lithium prices, he acknowledged, could ease the headline deficit but do not guarantee the structural consolidation credit markets demand.

The IPSA picked up the more upbeat mood in markets and opened above 11,200 points, consolidating three-week highs on the back of a corporate earnings season that has broadly beaten expectations, congressional approval of the government's Reconstruction Bill, and hopes for a truce in the Middle East. The Chamber's Finance Committee approved the government's three suppressive vetoes to the tax miscellany bill, with a floor vote set for Monday, August 10, keeping business expectations alive regarding the cut to the First Category tax — a measure SOFOFA estimates could generate up to 210,000 additional jobs over four years under its baseline scenario, though interpretive uncertainty is such that the big four audit firms — EY, Deloitte, PwC and KPMG — are already bracing for a wave of legal consultations once the law is enacted.

The Central Bank's Business Perceptions Report for August portrays an economy that is moving forward, but with exposed flanks. Companies report cost increases — driven by fuel prices and their knock-on effects on transportation and inputs — and are keeping headcount frozen. Hiring activity fell from the May report, and those who did make adjustments leaned slightly toward reductions. It's a picture consistent with labor market data: the unemployment rate for the April-June quarter came in at 9.4%, a five-year high, with 32,800 formal jobs destroyed over the period — the fourth consecutive month of decline in formal employment — and a creation of 114,000 informal positions that balances the aggregate but not the quality of employment. Even so, real wages are up 2.3% year-to-date, and labor costs accelerated in June, partly reflecting the shorter workweek and the start of the pension process. SOFOFA responded with a five-point labor reactivation proposal, centered on transforming severance pay into an individual account and universalizing access to daycare.

The minutes of the Central Bank's last meeting, analyzed by Santander Estudios, reinforced expectations of a hold on the monetary policy rate at upcoming meetings, with the issuing institute watching the deterioration in consumption and investment expectations. That deterioration is consistent with the signal from ASIMET: the metallurgical and metal-mechanical industry remains in recession, with no signs of near-term recovery.

On the trade front, a study by OCEC-UDP assessed the competitive position of Chilean exports in light of new U.S. tariffs on forced labor. The conclusion is that copper — which represents the bulk of exports to the United States — is not affected by the 12.5% tariff assigned to Chile, but grapes face a relative disadvantage against competitors such as Peru. Salmon, meanwhile, navigates more complex waters: Agrosuper reported a 3.7% decline in first-half earnings, to US$252 million, and its second-quarter results showed revenues 4.3% below year-ago levels, with pressure on both segments — meats and aquaculture — though a US$48 million tariff refund cushioned the impact on operating margin.

Looking ahead to the coming weeks, the elements to watch are multiple and feed into each other. Monday's floor vote on the miscellany bill will define the real fiscal profile of the tax reform and its impact on credit ratings. The U.S. Department of Commerce's decision on the expansion of copper tariffs could move the exchange rate and mining stocks significantly. The Central Bank will need to calibrate how much weight to give higher business costs and formal employment weakness versus wage dynamics at its next meeting. And the mortgage subsidy bill, unanimously approved in the Chamber and advancing to the Senate with 30,000 additional slots and a 6,000 UF ceiling, will reach its final stage in a real estate market with roughly 100,000 available homes — a number that illustrates both the magnitude of the challenge and the opportunity the instrument aims to catalyze.

**Cenco Malls (BCS: CENCOSUD)** — Cencosud's shopping mall subsidiary reported net income of US$90.2 million in the second quarter, up 27.9% year-on-year, with revenues growing 9.3% driven by the addition of 138,738 sqm of new leasable space in Chile, Peru and Colombia. The consolidation of the Plaza Central asset in Bogotá made a meaningful contribution to the Colombian result, reinforcing the company's regional profile.

**Molymet (BCS: MOLYMET)** — The Chilean molybdenum producer completed the acquisition of U.S.-based Rhenium Alloys for US$40 million, adding assets in molybdenum, tungsten and rhenium, along with products for semiconductor manufacturing. The deal broadens Molymet's exposure to the advanced technology supply chain at a moment of heightened geopolitical tension around critical minerals.

**Clínica Las Condes (BCS: CLC)** — The private clinic completed its capital increase, raising $80.120 billion, after subscription of 100% of the shares offered in two preferential option periods and an exchange auction. The funds will finance infrastructure and technology investments contemplated in the company's 2026-2030 strategic plan.