What Jumps Out: Politics Politics
Over the weekend the press dedicated at least a little time to the various reforms on the table: the social networks also chipped in. First and foremost, the Health and Pension systems do need an overhaul of some description however such is the political bias contained within almost every article or comment written, it’s hard to draw an accurate picture of what any reforms will finally look like. None of this is a surprise when we reflect on the fact that Colombia was recently surveyed as one of the most polarized countries in the world. Expect continued headlines surrounding the reforms.
The Central Bank has their non-decision meeting this week. They will sit down and discuss life but after the meeting we won’t know so much as to know if they had coffee or tea, or whether there were biscuits; at minimum there should be a press conference to get a feel for how they see the world.
All this is building up to February CPI at the end of the week…the folly of having a meeting where rates aren’t raised could be exposed. Analyst surveys are calling for a 13.25% terminal rate, versus the current 12.75%, that expectation is for March, but only because this week there is no full meeting.
January Unemployment will be released on Tuesday and there will be much interest after it came in much higher than expected (10.8%) in December. The IMF in a recent report suggested that at 11.1% Colombia would have the highest unemployment rate in the region in 2023. However, this needs to be put in context by the fact that over half of the working population is ‘off the books’ therefore accuracy is lacking.
On the markets the Peso had a bumpy week before recovering somewhat by Friday. Again the harbingers of doom are blaming it all on politics but in reality this is generally a bigger global picture. This applies to the equity market as well, it has underperformed but there are a plethora of reasons beyond the reforms. The latest ETF flow data tells us that we have had three straight weeks of equity and bond outflows from both Emerging Markets and Latin America – Chile, Peru and Mexico all had equally, or worse, weeks.
The COLCAP last week held above support levels with the results season in progress. Stock buy programs for Cementos Argos, Celsia and Grupo Argos certainly help.
Over the weekend Ecopetrol was in the headlines as they announced their latest reserves data – it has risen by 0.4% to just over 2 billion barrels which represents 8.4 years of supply. That particular stock will be keeping much more of an eye on the oil price which towards the end of last week was starting to show some signs of life.
Wishing you all a good week.
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