Sept. 23, 2008  (Bloomberg) — Chile, the best-performing Latin American stock market this year, probably will remain a relative safe haven and may benefit from easing inflation, JPMorgan Chase & Co. said.

     Chile’s Ipsa index has fallen 10 percent this year, about half the decline of Brazil’s Bovespa. The stock market’s “defensive” characteristics are supported by Chile’s stable politics and economy, developed capital markets and “substantial” reserves, strategists including Brian Chase wrote in a note to clients dated yesterday.

     Chilean stocks are now trading at “more attractive valuations” and may get a boost from a potential easing of inflation on lower commodity prices and the prospect for pension funds to increase domestic holdings, they wrote. They recommended easy-to-trade “defensive” companies such as Enersis SA, Banco Santander SA, Cia. Cervecerias Unidas SA and Banco de Chile.

     “We believe these names are likely to move first on a gradual pickup in sentiment,” the strategists wrote.

     Chile’s economy is “very well positioned” to handle global financial turmoil, Matthew Hickman, who helps manage $9.5 billion in emerging-markets stock at Credit Suisse Asset Management, told reporters in Santiago today.

     Chile has made “tremendous strides in the last 20 or 30 years in insulating itself and protecting itself against the vagaries of international capital flows, so from a macroeconomic view, in terms of reserves, in terms of fiscal account, we’re in a much better position,” Hickman said. “Secondly, Chile has been able to reduce its dependence on copper.”