After Javier Milei's surprise midterm victory in Argentina (documented here), along with the market reaction (see the Goldman note here), attention now shifts across the Andes to Chile's first-round presidential election next month.

Cryptocurrency-based prediction market Polymarket shows a potential victory for conservative free-market candidate Jose Antonio Kast, who is politically aligned with Jair Bolsonaro in Brazil and Milei in Argentina. The trend suggests that socialist power in Latin America may be weakening. 

Chile Presidential Election:

Kast: Social conservative, focuses his campaign on crime and immigration. Promises spending cuts, but would need congressional alliances to govern, limiting drastic policy moves.

Johannes Kaiser: Anti-establishment libertarian, similar to Milei, but with limited support.

Jeannette Jara (leftist, Communist Party affiliation): Seen as market-negative. If she outperforms in the first round, Chilean assets could fall. However, like Boric, she would likely face institutional constraints.

Evelyn Matthei (center-right): Viewed as the most investor-friendly but has struggled to differentiate herself. Could outperform polls as a moderate alternative.

Polymarket: Chile Presidential Election 

Bloomberg noted that investors are pricing in a Kast win, expecting market-friendly governance. Chilean equities just set another intraday record, while the peso's implied volatility is ultra-low.