Commodities could save Latin American markets in 2021

As the Covid-19 pandemic thrust financial markets around the world into chaos last year, Chile and Peru looked at their peers and issued a firm “hold my pisco.” Beyond being stuck in the epicenter of the global coronavirus outbreak, both countries saw an intensification of political and social unrest stemming from 2019, aggravating disorder in the western South American neighbors.

However, with the advent of 2021, the salvation for Chile and Peru could come from a familiar source: commodities.

In comparison to Brazil, markets in Chile and Peru took longer to recover as a result of political upheaval.

In Chile, the constitutional referendum and new protests kept investors wary, while Peru’s political situation turned into a veritable dumpster fire, with corruption allegations against former President Martín Vizcarra leading the country to have three presidents in the space of just seven days. Now, as incumbent President Francisco Sagasti tries to appease the country until elections on April 11, political and social movements in Peru are seeking to emulate their neighbors and demand their own constitutional referendum. 

Politics have also created room for economic populism. In Chile, demands for reform and...