Chileans hail new leftist leader, but markets balk

Boric (L) met outgoing President Sebastian Pinera, who he will officially replace next March

Investors reacted nervously on Monday after leftist millennial Gabriel Boric was elected Chile's youngest-ever president, beating out his far-right rival with promises of creating a "welfare state."

Boric, who at 35 is one of the youngest presidents in world history, made his first official appearance on Monday, meeting center-right President Sebastian Pinera.

The streets of Santiago and other cities erupted in celebrations at the former student activist leaders' victory, which closed a polarizing runoff race. 

The SP IPSA index closed 6.18 percent down, while the Chilean peso ceded 3.4 percent to the US dollar to reach an historic rate of 876.

"The public debt-to-GDP ratio looks set to rise much further under the new government," he added, which will contribute to keeping "local financial markets under pressure."

- 'Viva Chile!' -

Fireworks lit the skies for hours on end.

Boric had campaigned on the promise of increasing taxes and social spending to tackle Chile's yawning gap between rich and poor, to improve the pension and healthcare systems, create jobs and green the economy.

But his alliance with Chile's Communist Party made many uneasy in a country deeply suspicious of far-left economic doctrine since the hardships suffered under Marxist President Salvador Allende, partly due to a US blockade.

"We will do it protecting our macro-economy," he said.

"We are aware that it is important for the country to give certainties, which some may like and others not, but it is important to have certainty about what is coming," he said after his meeting with Pinera, who he is due to officially replace next March.

Chile inherited from its brutal dictator Augusto Pinochet a neo-liberal economic model credited with its relative wealth but blamed for deep-rooted social inequality that Boric has vowed to redress.

According to Chile's Servel election body, Sunday's turnout was more than 55 percent of Chile's 15 million eligible voters -- a record since voting became voluntary in 2012.

"All (Kast's) anti-rights, anti-women, anti-gay speech, I think it helped mobilize that young segment," she said.

Chile is going through profound change after voting overwhelmingly last year in favor of replacing the Pinochet-era constitution.

The drafting process, in the hands of a largely left-leaning body elected in May, must yield a constitution for approval next year, on the new president's watch.

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Originally published as Chileans hail new leftist leader, but markets balk