What Jumps Out – Fedesarrollo: Colombian Economy Still Warming

The latest Financial Opinion Survey for November has been released by Fedesarrollo and in keeping with the recent macro data, consensus estimates are continuing to edge higher.

At the foot of this note are the links to the full report – in the meantime an executive summary…if you are not an executive, don’t worry you are also free to peruse.

MACRO

GROWTH: After the Q3 GDP number came in at 13.2% (above all estimates) we find that the YE 2021 number has now risen from 8.75% to 9.0%, with a top estimate of 9.57%. It is worth noting that President Duque last week was publicly predicting 10%. For 2022 the average estimate now stands at 4% – according to most external agencies that would be a region leading number.

INFLATION: With such a snap-back in the economy it is no surprise that CPI is rising (4.58%), albeit slower than expected last month, and that YE estimates are still edging upwards. The latest consensus is 4.89% versus 4.83% a month ago. By YE 2022 that is expected to have fallen away to 3.70%.

INTEREST RATES: We have already seen an end to accommodating rates and a rise to 2.5% at the last Central Bank meeting – this was more radical than most expected. The expectation (69% of analysts) is that rates will rise to 3% by YE 2021. A further year down the road, 4.25% is expected to be the number.

PESO: Clearly interest rates impact on the currency, Turkey and New Zealand being cases in point this week, but recent increases have not protected the Peso from a rampant dollar. With the oil prices fluctuating over recent weeks, there has also been an increase in YE Peso estimates from $3,728 to $3,789. If we reach out to YE 2022 that estimate is at $3,715 – however that is election, oil and global economy dependent.

INVESTMENT

DETERMINANTS: Sociopolitical factors (elections primarily) at 39.29% remain the most important element for decision makers, followed by Monetary Policy (28.57%). There has been a big decline in Economic Conditions (20.51%-7.14%) perhaps owing to it being less of a concern as the economy expands.

PREFERENCES: As per last month, the top preferences are in the debt market. Firstly, Inter Bank Linked Corporate Debt (48.27%) followed by inflation linked Govt Debt (31.03%) and inflation linked Corporate Debt (31.03%).

MSCI COLCAP: Despite the pullback in the index there is a little less confidence in the market. In November 77.4% were looking for an increase over the next quarter, in October that stood at 92.1%. In terms of sectors Holding Companies (93.8%) have replaced Oil (56.3%) as the top pick, this due to the uncertainty over oil prices caused by the recent headlines over releases from international oil reserves. Finally, in terms of stocks the top two are Grupo Argos (Holding) and Nutresa (Food) both with 43.8% – the recent tender offer for Nutresa no doubt a factor here.

STOCK MARKET CONFIDENCE INDEX

The other survey released was SMCI. In contrast with the slightly less bullish COLCAP outlook, there was an increase from 94.75% to 96.15%.

The Buy-on-Dips Confidence Index reached 54.55%, which represents an increase of 1% compared to November.

The Crash Confidence Index reached 54.55%, which represents a drop of 20.5% – this is a concern as it represents the proportion of analysts who attach little likelihood of a collapse if International Markets turn sour.

Finally, the Valuation Confidence Index reached 92.86%, which represents an increase of 1.2% – this is the percentage of analysts who feel the market is not overvalued.

 As promised please find the links below :

Financial Opinion Survey :  https://tradersbvc.com.co/categorias/productos?cp=NzE=

Stock Market Confidence : https://tradersbvc.com.co/categorias/productos?cp=NzI=

That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops