Sunrise Over El Dorado : Alianza : December 3rd 2018

DAILY THOUGHT : This week, Thursday is the given date but legal matters in Colombia rarely run on time, we are due to find out the name of the Ad-Hoc Fiscal who will be appointed to investigate the whole sorry Odebrecht case which has dogged the likes of Corficol and Grupo Aval over recent months. The situation has been complicated by the fact that current Fiscal Martinez has had to recuse himself from the case due to a previous working relationship with Grupo Aval and even further complicated by the fact that the figure of Ad-Hoc Fiscal simply doesn't exist. The key here surely is to get to the bottom of a situation which is attracting global attention as quickly as possible.

MARKETS

COLCAP volume was boosted by the re-balance trading which effectively doubled total volume to USD63mn and was to the sell side in the auction - the final close was @ 1379.24pts. down 0.55% on the day. The most traded stocks were ECOPETROL (USD 13mn), PFBCOLO (USD 10mn) and GRUPOSURA (USD 8mn) whilst performing best were MINEROS (+5.26%) , EXITO (+4.55%) and ETB (+4.41) - to the down side were BVC (-9.91%) ,BCOLOMBIA (-3.94%) and PFBCOLOM (-2.95%). The Peso gave a little of Thursday gain retreating 0.12% to 3271 - volume was tidy at USD1.4bn on a day where everyone was watching the G20.

Yields were close to unchanged along the curve with the 2024 closing at 6.33% & the 2032 at 7.36%. *The markets this week will be concentrating largely on overseas events - comments on US/China trade already look set to improve sentiment whilst OPEC announcements and local inflation data will also be on investors's minds*

TAX REFORM

No real developments over the weekend - this week the bill will be sliced and diced by Congress who will subsequently take a vote on the matter, the question of course is whether the current water down version (it is starting to feel like drink in a night club) can avoid further damage this week. Post approval all eyes will be on the other side of the balance sheet to see where the spending cuts will come in 2019 - those discussions are likely to resemble Wilder-Fury over the weekend, it isn't hard to imagine opposition members querying the increase of the defence budget in a post conflict era when education and social projects are facing cuts....nuggety (a word included just to perplex my Colombian friends).

No surprises or even comments from the Central Bank as the carried out their 'non-decision' meeting for November - as expected they did announce that on Monday they will open the latest tranch of USD400mn in their program to purchase dollars via the derivatives market - the options being offered can be exercised between Dec 4th & Dec 28th.

CEMENT

The latest data from the DANE reflected the continued doldrums around the cement market - production was up 2.4% to 1,107,100 tons which of course is the right direction to be going but the YTD number of 10,268,600 is up 0.2% - this versus a background of expectation from the 4G projects that this would be a break-out year - 2019 does threaten to be that year as earth-movers are replaced by construction workers on those same projects but the frustration of investors is fully understandable. Naturally we have a similar situation with Dispatches although the October reading was better with an increase of 5.2% YpY to 1,082,900 but YTD there has actually been a YTD decline of 0.4% - disappointing. DISCLAIMER The information contained in this report is not based on, does not include or/and has not been structured upon privileged information. Any opinion or projection contained in this document is exclusively attributable to its authors and has been prepared in an independent and autonomous way with information that was available as of this date, any investment decisions taken should be based on a variety of criteria not uniquely the information herein contained. Future projections, estimates and previsions are subject to various risks and uncertainties, which prevent us from ensuring that the former will be correct and precise in the future, or from stating that the information, interpretations and knowledge upon which they are based will eventually prove valid. In the same token, real results may substantially differ from the projections contained herein. By making use of this document you are agreeing to adhere to the limitations set forth above.