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Jensen Hung: the man behind Nvidia – Diario Financiero

The (dis)trust of boards of directors – Diario Financiero

Partner at Adapsys and UAI professor

Now that the shareholder meeting season is over, it's worth asking what patterns emerge from them, particularly regarding the perspectives of the boards of the country's leading companies. 

We might note that Falabella's meeting lasted 48 minutes and that the internal storm has significantly calmed; that Peter Paulmann is back at Cencosud; that Entel is no longer the only IPSA company without women on its board; that Latam has taken off strongly again; or that Alejandro Gil seems determined to steer Clínica Las Condes into further trouble. But these are just anecdotes.

Something more relevant and telling are the letters from several board chairpersons openly criticizing the government for its leadership and economic policies and their negative impact on investment. If a concrete event was needed to validate those words, it came with CMPC's announcement to invest 4.570 billion dollars in a new pulp industrial complex, not in Chile, but in Brazil. 

When trying to understand what is happening in the boards of the country's large companies, the word distrust—or at least a lack of trust—seems to be a good reflection of the prevailing atmosphere, undoubtedly influencing the decisions being made. Simply put, the focus seems to be more on the risk matrix than on the pursuit of opportunities.

Does this make sense? Not to the government. From its perspective, the economy is taking off, and the growth figures for the first quarter confirm this. Additionally, the projections for copper prices are promising—combined with a still-high exchange rate—and concrete advances have been made in lithium and green hydrogen. The time to trust has arrived; that seems to be the message.

But the boards aren't buying it. The scars of October 18, the excesses of the first constituent process, and the poor performance of most companies last year are still fresh in their memories. It’s not yet time to trust; that seems to be the response.

Economic growth, it goes without saying, is based on trust. If you are going to take risks, betting part of your capital on a business, it is because you believe there is a good chance the outcome will be positive, meaning that the future will be better than the present. When there is trust, countries prosper; when there isn't, they stagnate. 

Trust, however, isn't a mathematical equation, and it can't be described in black and white. It's in the grey area, and it's more like a field to cultivate. How do you know if the soil is fertile enough? How much more work is needed before planting? Different farmers will have different answers to that question, depending on their risk appetite and creativity. What's notable is that when the first ones start planting, others gradually follow, even amid uncertainty about the outcome, because their confidence has increased.

Is it time to start trusting and move past the pains of the last five years? Waiting for stability, security, and certainty would be like seeking the promised land, which no longer exists, simply because the dizzying pace of change in the world is here to stay. And Chile is not immune, as we well know.