2026 Market Playbook: Banking, Lithium and Defensive Sectors Steer Post‑IPSA Rally

Markets See 2026 Through A Selective Lens After 2025 IPSA Surge

The IPSA index is on track to close 2025 with gains exceeding 50 percent, setting a new starting point for 2026. analysts say the year ahead will reward selective bets as returns moderate, dispersion widens across sectors, and the macro and political backdrop tests investor expectations.

Banks And SQM

Investors expect banks to be overweight in 2026, supported by stronger balance sheets and a more orderly macro environment. Demand for credit could rise as rates ease further.

banco de Chile and Santander Chile stand out for liquidity, asset quality, and exposure to the local economic cycle.

Beyond banks, attention turns to companies tied to strategic inputs, especially lithium. AI supply chains are seen as resilient themes in a slower growth backdrop.

SQM remains a core holding despite political noise around its deal with Codelco. If regulators raise no objections, the contract could proceed with few hurdles.

Utilities And Malls

Defensive stocks continue to anchor portfolios, with the utilities sector leading the way. Enel Chile offers stability through its regulated profile, while Aguas Andinas provides a hedge against macro shifts.

Exposure to mall operators remains prudent. Cenco Mall, Parque Arauco, and Mallplaza defend portfolios by leasing to retailers, backed by solid balance sheets.

These assets deliver predictable cash flow, though upside might potentially be more modest after a strong rally.

Argentina

Investors are most cautious on discretionary spending, with several names pricing in a more favorable scenario already.

Market participants advise trimming exposure to Argentina-heavy firms such as Cencosud and Sonda, as macro improvements are offset by debt maturities and adjustment risks despite better growth and inflation trends.

Key Takeaways For 2026 Outlook

Sector	Strategic Take
Banks	Overweight; strong liquidity and local-cycle exposure; preferred: Banco de Chile, Santander Chile.
Lithium / AI Inputs	Attractive on supply chain and AI demand; SQM remains a key name pending regulatory outcomes.
Utilities	Defensive leadership; Enel Chile and Aguas Andinas offer stable cash flows.
Malls	Defensive through retail leases; Cenco Mall, Parque Arauco, Mallplaza provide quality defensives.
Argentina Exposure	Exercise caution; reduce positions in Cencosud, Sonda; macro risks persist.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Market conditions are volatile,and readers should perform their own analysis before making financial decisions.

Reader questions: Which sector do you expect to lead in 2026 and why?

Are you overweight on banks or lithium-related stocks given the political landscape?

Share your thoughts in the comments below to join the discussion and help others navigate the year ahead.

article.2026 Market Playbook: Banking, Lithium and Defensive Sectors Steer Post‑IPSA Rally

IPSA Rally Overview – What Triggered the Surge?

• Year‑end 2025 rally: The Chilean IPSA index climbed 12 % from August to December 2025, driven by strong commodity prices, renewed foreign investment, and a stabilising political climate after the 2024 presidential transition.
• Key catalysts:

1. Copper price rebound: $9,200 / tonne in Q4 2025, the highest as 2018.
2. Policy certainty: New mining royalties that favour large‑scale projects boosted miner confidence.
3. Domestic consumption: A surge in retail banking deposits (+8 % YoY) and a modest rise in consumer confidence (CSI +3 points).

these forces set the stage for three sectors that are likely to dominate 2026 performance: banking, lithium, and defensive stocks.

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Banking Sector Outlook – Key Drivers for 2026

Driver	Impact on Banks	Why It Matters
higher interest margin	Net interest income expected to rise 4‑5 % YoY as the Central Bank of Chile hikes the policy rate to 5.75 % (target range) by Q2 2026.	wider spread between loan and deposit rates improves profitability, especially for large‑cap banks (Banco de Chile, Santander Chile).
Digital transformation	Accelerated adoption of fintech platforms is projected to cut operating costs by 12 % over the next 12 months.	Cost efficiencies free up capital for credit expansion and dividend increases.
Regulatory tightening	Basel III implementation will raise capital adequacy ratios, prompting banks to optimise balance sheets.	Stronger balance sheets attract institutional investors and lower funding costs.
SME credit recovery	Non‑performing loan ratios fell to 2.3 % in Q4 2025; further improvements expected as GDP growth steadies at 2.6 % YoY.	Healthier loan books support enduring earnings growth.

Actionable banking tactics for investors

1. Prioritise banks with diversified revenue streams – those that combine retail, corporate, and wealth‑management services tend to buffer cyclical swings.
2. Look for fintech partnerships – joint ventures with platforms like Kueski or nubank signal future growth.
3. monitor dividend yield trends – banks targeting a 5‑6 % payout ratio are signaling confidence in cash flow stability.

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Lithium Market Drivers – The 2026 Growth Engine

• Global EV demand: International Energy Agency (IEA) forecasts EV sales to reach 40 million units in 2026, a 20 % YoY increase, fueling lithium‑ion battery production.
• Chile’s “Lithium Valley” expansion: The government approved the Salar de Atacama Phase‑III project in March 2025, unlocking an additional 40 kt of LCE (lithium carbonate equivalent) per year.
• Supply‑side constraints: China’s “dual‑control” policy limits overseas lithium imports, creating a premium for South American producers.

Top lithium players to watch

1. SQM (Sociedad Química y Minera) – Expected to raise output to 95 kt LCE by 2026, leveraging new evaporation pond technology that reduces water usage by 30 %.
2. Lithium Americas Corp. – The Cauchari project in Argentina, backed by a $2.5 bn investment, is on track for first‑of‑its‑year commercial production in early 2026.
3. Albemarle Corp. – Diversifying into downstream processing (cathode material) to capture higher margins.

Practical lithium investment checklist

• Resource base: Verify proven reserves > 10 Mt LCE and a clear expansion roadmap.
• Cost structure: Target producers with cash‑costs under $7,500 per tonne of LCE.
• ESG compliance: Companies with water‑reuse initiatives and community engagement programs mitigate regulatory risk.

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Defensive Sectors – Safe Havens in a Volatile Market

Sector	2025 Performance	2026 Outlook	Core Reason
Utilities (e.g., ENEL Chile, CGE)	+4.2 % total return	Stable 5‑6 % dividend yields	Regulated rates provide predictable cash flow.
Consumer Staples (e.g., Walmart Chile, CCU)	+3.8 %	Inflation‑adjusted pricing power supports modest growth.	Low‑elastic demand buffers against economic slowdown.
Healthcare (e.g., Clínica Las Condes)	+5.1 %	Rising private‑insurance penetration (projected 12 % YoY) fuels revenue.	Demographic ageing drives steady demand.

Defensive playbook tips

1. Focus on dividend aristocrats – firms with a 5‑year dividend growth streak tend to outperform during market corrections.
2. Prioritise low‑beta stocks – beta < 0.8 historically correlates with reduced volatility in Chilean markets.
3. Consider REIT exposures – property‑linked REITs that own logistics centres benefit from e‑commerce growth while offering attractive yield (6‑7 %).

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Strategic Playbook for Investors – Integrating the Three Pillars

1. Allocate core capital (45‑55 %) to high‑quality banks

• Split between large‑cap (30 %) and regional banks with niche SME focus (15 %).
• Assign growth capital (25‑35 %) to lithium exposure
• Direct equity in SQM or a lithium‑focused ETF (e.g., iShares MSCI Global Lithium ETF) for diversification.
• Reserve defensive allocation (15‑20 %)
• Mix utilities,consumer staples,and a small REIT position to lock in yield and lower portfolio beta.

Risk‑management checklist

• Currency hedging: Chilean peso volatility can erode returns; use forward contracts for > USD‑C$ exposure > $200 mm.
• Liquidity buffers: Keep 10 % of the portfolio in cash or short‑term government bonds to seize opportunistic entries after IPSA pull‑backs.
• Scenario analysis: Model three cases – (i) Optimistic: copper price > $10,000/tonne; (ii) Base: copper at $9,200/tonne; (iii) Pessimistic: copper < $8,000/tonne. Adjust sector weights accordingly.

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Real‑World Example – Banco de Chile’s 2025 Digital Pivot

• Outcome: In 2025, Banco de Chile launched “Banca 360,” an AI‑driven mobile platform that increased digital transaction volume by 22 % and reduced branch operating costs by 14 %.
• Investor impact: The bank’s EPS rose 9 % YoY, and its share price outperformed the IPSA by 4.3 % in the last quarter.
• Lesson: Banks that successfully integrate technology see immediate profitability gains and stronger customer retention-key criteria for 2026 selections.

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Practical Tips for Immediate Implementation

1. Set up a watchlist: Include ticker symbols SQM, BCI (banco de Chile), ENELCH, and the iShares Global Lithium ETF.
2. Create a quarterly review cadence: Re‑balance sector allocations every three months to reflect earnings releases and commodity price shifts.
3. Leverage analyst research: Incorporate consensus forecasts from bloomberg, reuters, and local brokerage houses (e.g., Banchile) for up‑to‑date target prices.
4. Stay informed on policy: Track Chile’s Ministry of Mining announcements-particularly any changes to royalty structures or export tariffs.

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Key Takeaways

• Banking,lithium,and defensive sectors form the triad that will steer the Chilean market after the 2025 IPSA rally.
• Robust earnings growth, strategic digital initiatives, and sustained commodity demand underpin each pillar.
• A disciplined allocation framework, combined with proactive risk management, positions investors to capture upside while safeguarding against volatility.