What Jumps Out – Fedesarrollo (June)

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=

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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=

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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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