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Sunrise Over El Dorado : Alianza : February 7th 2019

  • Writer: Rupert Stebbings
    Rupert Stebbings
  • Feb 7, 2019
  • 2 min read


DAILY THOUGHT : Today in Bogota is 'Car Free Day' - millions will have to take to walking or biking or even the suffrage of public transport, a very important environmental gesture for the future of Colombia and the planet.....meantime 250km away EPM are playing creator with the Cauca, the country's second biggest river, as they try and organize Hidroituango in the name of progress, lowering the level of the river enormously before normalizing from tomorrow....messing with nature, a dangerous game.....












A wobble from the COLCAP as it dropped -0.30% , closing @ 1488.90pts. Pre MOC, the Colcap was ending -0.07% thereby losing 0.23%, during the last 5 minutes of trading with USD 6.5mn (19% of total vol) of the total volume of USD 34.5mn traded in the auction. The most traded stocks were ECOPETROL (USD 7.5mn), PFBCOLOM (USD 5.5mn) and HCOLSEL (USD 3mn) whilst the best performers were CLH (+4.8%), PFAVH (+3.30%) and BOGOTA (USD 2.04%)- struggling somewhat were CONCONCRETO (-2.02%) ,CELSIA (-1.94%) and GRUPOARGOS (-1.51%).

The PESO had another tidy day closing at 3106 (+0.13%) having traded as high as 3099 at one point - a lower day in volume terms than Wednesday but USD1bn still higher than 2018 average.

The Bond market continues to mark highs (or lows) with the benchmark 2024 down 3bps to 5.965%, close to our 5.95% target although the 2032 was slightly weaker at 7.0%.








Having taken a good look at the new CPI basket and the benign reading for January, even though the information from the DANE is still incomplete, we are comfortable with our FY inflation estimate of 3.83% however were hedging slightly on the interest rate increases - we are still above the consensus however we are still clear as to whether we will finish 2019 at 5% or 5.25%. Our reasoning in both cases for being above consensus is the same :

  • An impact from El Niño - it may be milder than last time but rivers and reservoir levels are starting to drop and that is likely to filter into food and energy prices.

  • Positive surprises on GDP growth.

  • Difficult comparable when it comes to inflation.

  • Dollar weakness as the year matures.

Looking at the new basket weightings we find that food and beverages which previously combined with alcohol to weight 28.21% has now been cut to 16.75% (15.05% + 1.70%) whilst housing and utilities has actually risen from 30.1% to 33.12%.The biggest new area is Restaurants & Hotels (9.43%) owing to the new propensity amongst Colombians to travel and eat out. Overall inflation is simply not a concern at this juncture for the Central Bank and in keeping with the rest of the market we expect no changes until at least April.



 
 
 

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