SANTIAGO (Reuters) - Billionaire conservative Sebastian Pinera will begin his second presidential term in March with a strong mandate after trouncing his center-left opponent in Sunday's presidential election, marking a turn to the right in the world's top copper producer.
Still, the former president, whose 2010-2014 presidency was marked by massive student protests, will face a divided Congress and an upstart leftist coalition that has vowed to fight his plans to lower taxes and "refine" predecessor Michelle Bachelet's progressive policies.
Chile's peso strengthened more than 2 percentage points on Monday, while the IPSA stock index hit an all-time high and was up nearly 8 percent, as investors bet on more business-friendly policies from the incoming Pinera administration.
Pinera, 68, won more votes than any president since Chile's return to democracy in 1990, with a nine-percentage point win over center-left senator Alejandro Guillier in the runoff vote.
It was the biggest ever loss for the center-left coalition that has dominated Chile's politics since the end of Augusto Pinochet's dictatorship, and followed other South American countries including Argentina, Peru and Brazil that have shifted to the political right in recent years.
The results of a first round vote and a congressional election last month point to a more divided country, however. Far-left Beatriz Sanchez captured 20 percent of votes, nearly as many as the more moderate Guillier, suggesting some dissatisfaction with Chile's long-standing free-market model.
Guillier on Sunday acknowledged the "harsh defeat" and urged his supporters to defend Bachelet's progressive reforms.
Pinera's Chile Vamos party has 72 of 155 representatives in the lower house, more than any other bloc. Still, without an outright majority in either chamber, Pinera's allies will have to form alliances to pass most laws.
Sanchez's coalition earned its first senate seat and around 20 seats in the lower house.
"The Frente Amplio commits to continuing to work for a changing Chile, with more rights and more democracy," she wrote in a Tweet congratulating Pinera.
Efforts by Pinera's ideological allies in Brazil and Argentina to reduce fiscal deficits by cutting spending and reforming pension systems have faced political opposition and sparked protests in recent months.
Pinera, to be sure, has done his best to strike a conciliatory tone. He does not take office until March but was already met with Bachelet early Monday morning.
In his victory speech Sunday night, Pinera addressed Guillier, saying, "Despite our great differences, there are large points of agreement."
(Reporting by Dave Sherwood, Antonio de la Jara, Felipe Iturrieta and Caroline Stauffer; Editing by Nick Zieminski)