Sunrise Over El Dorado : Alianza : November 30th 2018

DAILY THOUGHT : An important day in the country's history as the truth commission opened its doors for business at the start of a three year mandate to investigate the many crimes committed over the past 50 years - it is an impossible undertaking however its needs to be attempted as the nation has a duty to the victims on all side and their families to get to the truth. As per the Justice Commission there are those that oppose the process however the higher calling at this point is for those who have suffered.

MARKETS

The COLCAP rose 0.12% closing @ 1386.80pts on total volume of USD35mn - a fairly uneventful day where the index underperformed some of the recovery seen around the region. The most traded stocks were EXITO (USD 9mn), ECOPETROL (USD 5mn) and PFBCOLOM (USD 4mn). In terms of movement we saw ELCONDOR (+4%) , CLH (+3.75%) and ETB (+3.13) rising whilst CNEC (-2.19%) , BOGOTA (-2.17%) and CELSIA (-1.63%) went the other way. The Peso had a much better day after conversations between Russia and Saudi Arabia led to a rally in the oil price - this allowed the currency to rise over 1% to close at 3238.95 albeit on more modest volume than has been seen recently.

The bond market had a good day with yields dropping along the curve - the 2024 maturity came down 7bps from 6.44%-6.37% whilst the 2032 fell slightly more from 7.47%-7.38%.

This tiny segment will be used for a brief update of the shenanigans of the tax reform debate :

No major developments yesterday and we expect little today ahead of the vote next week - the headlines on VAT were related to plastic surgery, pre-paid medicine, low cylinder motorbike sales & beer - an eclectic mix if ever there was one. One group complaining were those related to the housing market as a 2% VAT tax has been proposed for home sales at the top end - the suggestion is that this will lead to people playing with valuations in order not to pay. With complete respect to the federation involved but if they think that is not the case today they are stumbling around in the dark - it is doubtful if there is another area with more evasion, all legally done.

The Central Bank will sit down this morning for their monthly gathering however under the rules agreed at the outset of 2018 there will be no decision (I have yet to fully understand that concept) however even if there was to be a decision it would be to leave rates at 4.25%. Whilst CPI will likely move upwards as 2019 commences for the time being it is well under control and on the other side of the equation the economy is growing well and in no need of further stimulus. What we do expect to hear about is the next auction of options (USD400mn) for December as the Government continues to increase reserves - the auction should take place at the beginning of next week.

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