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Colombian Update : What's New (s) : Real Sector, Hotels, Construction, Sustainability..

  • Writer: Rupert Stebbings
    Rupert Stebbings
  • Sep 16, 2018
  • 4 min read

WEEKEND UPDATE

As per last Monday a little look back today at news over the last few days, the weekend as such didn't offer too much fresh news ahead of this week, tomorrow FinMin Carrasquilla is due in Congress and is expected to receive a hefty cross-examination of his role in the Water Bonds from a decade ago and its connection(or not) to a firm he was subsequently connected to. He has via the press mounted a robust defence of his action and hopefully there won't be too much noise beyond Tuesday about this - not least because President Duque has put his hands in the fire this past week for his Finance Minister. REAL SECTOR Another tidy if unspectacular Retail Sales reading for July, somewhat in line with what we saw in the latest Consumer Confidence data. The overall increase was 3.2% and net of vehicles was 2.1% (real terms) so solid enough and driven by food and vehicles which between them accounted for 88% of the increase, to the downside there was little in terms of a sector dragging on the numbers....hyper-market data was also tidy with an increase of 4.4% for the month. YTD there has been an increase of 5.3% and again food and vehicles were preeminent in the growth although technology has also played a role driven in part by the World Cup. A very quick glance at the YTD vehicle data (+6.1% real terms) makes for some interesting reading. Whilst there has been a very healthy increase for cargo trucks (35%) which hopefully reflect the state of the economy, as well as passenger vehicles and the more costly 4x4/truck sector when we glance over at the more basic car market composed of saloons etc we find a decline of 2.6% in 2018, even in July sales of that component of the market were down 0.1%. - a reflection of the middle income segments continued lack of conviction perhaps ?












Meantime there was a most encouraging number from the industrial sector as 29/39 sectors registered positives YoY performance amidst an overall increase of 3.5%. Whilst refining increased 2% and was a major contributor it was the most important as the chemical sector saw an increase of 15.8% and was the heaviest weighing in terms of that contribution. Additionally there was also a very good month for meat/fish processing and very little in terms of other sectors struggling. YTD the Industrial sector has seen an increase of 2.7% and whilst that is certainly going in the right direction perhaps one area of disappointment will be the employment numbers for the sector which were down 1.1% for July and 1.7% YTD. CONSTRUCTION The latest RMC data continues to make for gloomy reading although there are some glimmers of hope for those watching the larger infrastructure programs. Overall production for July stood at 559,174 which was a modest decline of 0.5% YoY however it is worth remembering that July 2017 was already down 6.9% on the previous year. If we break it down we find stability in the housing sector which accounts for around half of total consumption whilst there was a drop of 17.4% in other buildings whilst supply to Civil Works rose 35% which hopefully is driven by the 4G and other such like programs. YTD the pattern has been somewhat similar with an overall decline of 6.7% with housing down 8.9% being the main driver whilst Civil Works are up a more modest 21.4% as we look at 2018 as a whole. HOTELS Switching across to the hotels and we find a sector in rude health with both income and occupancy in good shape. July saw a 9% increase in real income versus 2017 which in turn was up 2.6% on 2016.


Looking at occupancy we find a 59.5% reading which is the highest ever for July and one of highest numbers historically for any month - one thing that cannot be stressed enough is that those occupancy numbers are growing despite a relative explosion in the number of beds on offer be they hotels or hostels. Looking at the overseas visitors in July whilst 43.9% were here for pleasure another 43.4% are here in business whilst a further 5.4% were attending conferences, all very encouraging stuff.


SUSTAINABILITY Many congratulations to my former employer Bancolombia for coming out top of the rankings globally when it comes to sustainable banks according to DJSI - coming out top of 201 banks in voted to participated of which 133 were evaluated from whom 26 were designated sustainable status. Honourable mentions also to the other local companies as well especially Grupo Argos who retained their number status in their respective category and Nutresa who remained second. Grupo Sura in turn were the only mixed financial institution from Latam nominated. Filling out the ranks from Colombia were ISA, Grupo Exito, Cementos Argos, GEB, Celsia & Davivienda who were nominated from amongst the 3504 companies invited to be evaluated to be part of the total of 317 companies with in the index, a very fine representation indeed.


 
 
 

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