What Jumps Out – Financial Opinion Surveys

Yesterday, Fedesarrollo published the latest analyst survey for May – and again the indications are that the economy continues to heat up, which as stated before, is a double-edged sword.

Growth: We now know that Q1 GDP stood at 8.2%, well above the 7.4% expected and now we see a recalibration of the FY 2022 number. A month ago, the consensus stood at 4.6% – that number is now 5%, either of which would point to Colombia being the fastest growing economy in Latam. The expectation for Q2 is now at 6.7% – but judging by the local activity, that could be an understatement. All this during a period when the Presidential elections were going to supposedly impact the economy.

Inflation: With such rapid growth and the global geopolitical situation, there are real concerns about how high CPI could go. In May inflation touched 9.23%, a figure not seen for many years – again this has pushed the YE 2022 estimate to 8% – from 7%. The Central Bank’s target range is 2-4%, even by the end of 2023 that may not be attainable. A year end number of 8% would have an impact on the minimum salary negotiations.

Interest Rates: With inflation comes higher interest rates. At 6% they have already grown considerably but the terminal rate is now standing at 8.25% by the end of the year, before falling during Q1,23.

The Peso: The lottery continues with the currency. Year-end expectations have risen once again at $3850 ($3800 last month) but there are so many variables globally it is at best a guesstimate.

Investments: With an election upon us 54.8% of money managers cite Sociopolitical factors as the main variable when considering investments. Monetary policy (22.6%) is next on the list. In terms of what to invest in, most products are stable however there was a drop (-26.7%) in local stocks and a rise in cash to 33.3%. In terms of the COLCAP 74.7% expect a decline over the next three months.

Sectorially, financials (94.1%) are the top pick followed by energy (82.4%), while oil has dropped away to 35.3%. Top Picks within that are Bancolombia (41.2%) & GEB (35.3%).

SMCI: In terms of stock market confidence there was another decline of 6.4% to 71% which is clearly reflected in the COLCAP outlook above.

The full details of both reports (in English) are to be found on the BVC webpage on the following links.

SMCI: https://bvc.co/news/stock-market-confidence-indices-smci-may-2022-cl3izccl52az40albeys1f0sd

BFOS: https://bvc.co/news/financial-opinion-survey-may-2022-cl3iyk1rr29or0bk7bahxnvc0

________________________________________

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