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Voters Reject New Constitution But Process Set To Continue

CHILE

In a nationwide plebiscite held on Sunday 4 September, Chilean voters roundly rejected the new constitution put forward by the country's constitutional convention. The new document was rejected by a margin of 61.9% to 38.1%, a much wider gulf than had been indicated by pre-voting opinion polls.

  • The rejection does not mean an end to Chile's process of creating a new constitution to replace the current Pinochet-era document. Most Chileans have shown support for replacing the constitution, just not with the option offered in the 4 September vote.
  • Instead, the gov't of President Gabriel Boric is likely to decide on whether to create another constitutional convention, or to amend the current constitution. This process could take some time, during which political risk will remain elevated as various political factions seek to influence the process.
  • However, over the longer term political risk to market stability in Chile as a result of the constitutional process is likely to decrease. Following the rejection of a constitutional option viewed by some as radical, any new/reformed constitution is likely to be more moderate in its outlook, and therefore less worrying for market participants.

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