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What Jumps Out – Fedesarrollo (June)

Posted On June 25, 2021
By : Rupert Stebbings
Comment: 0
Tag: bancolombia, bonds, cementos aros, centralbanks, ecopetrol, fedesarrollo, financial opinion survey, oil, rupert stebbings, smci, stock market confidence indices

Monday saw the latest surveys released by Fedesarrollo – the Financial Opinion Survey (FOS) & Stock Market Confidence Indices (SMCI) – for the month of June. Please find below both the links and an executive summary of the latest findings.

RATES: By the end of 2020, 50% of analysts foresee an increase of 25bps in rates to 2% whilst 27.8% are expecting no change. In 12 months’ time, the consensus is that the Central Bank will have increased rates to 2.50%.

GROWTH: Expectations continue to grow. For 2020 the consensus is now at 5.5% – up 0.2% MoM. This is still below the Government’s 6% projection, but we are moving in that direction.

INFLATION: The May reading of 3.30% was much higher than expected and it is expected to rise again to 3.60% in June. The YE expectation is now for 3.68%, a large increase from the 3.24% a month ago.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

PESO: The most devilish of all to predict – even for the next month. For the end of 2021 there has been little change – $3600.

MARKETS: Traders are expecting both 2024 & 2028 bond yields to remain solid over the next 3 months. In the case of 2024 77.8% are expecting a yield of 4-5% (4.63% currently) and 86.1% expect the 2028 to trade between 6-7% (6.58%).

INVESTMENTS: Index-Linked Corporate Bonds (47.22%) & those pegged to the Central Bank (41.67%) are the top picks – there has been a jump in local equities from 10% in May to 27.78% in June.

MSCI COLCAP: There is a somewhat cautious tone with the index – close to 85% expect it to rise over the next three months but proportionately more (45.5%) expect a modest increase when compared to last month (35.1%).

PICKS: Financials (85%) and Oil (70%) are the preferred sectors whilst in terms of stocks Ecopetrol (55%), Cementos Argos (40%) & Bancolombia (35%) are the top choices.

Please find below the link to the full FOS report (English):

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

________________________________________

Sticking with the markets the SMCI survey for June reflected an increase in confidence when compared to May.

The overall confidence number stands at 96.97% which is up 5.1% from May – breaking that down we see other improvements.

  • The Buy-on-Dips Confidence Index reached 59.26%, which represents an increase of 7.6% compared to the past month and of 15.5% relative to 2020.
  • The Crash Confidence Index reached 71.43%, up 5.8% from May and 32.5% versus June 2020.
  • Finally, the Valuation Confidence Index reached 90.74%, which was down slightly (0.3%) from May.

Please find below the link to the full SMCI report (English):

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

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About the Author
Prior to becoming the BVC's (Colombia's stock exchange) International Account Manager, London native Rupert Stebbings spent 13 years opening the Colombian equity market to foreigners. All this after a spell "stateside" in NYC. Rupert's opinions are his own and not necessarily those of Finance Colombia or the BVC.
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