Sunrise Over El Dorado : Alianza : February 14th 2019

DAILY THOUGHT : The courts have over-ruled a previous decision and local districts will no longer be able to hold referendums or plebiscites when it comes to mining or infrastructure development - as per all things in life there needs to be balance and the situation had swung too far towards the local communities. However whilst ordinarily the priority should be the collective there also needs to be the opportunity for redress when necessary as highlighted by events in Brazil and here locally at Hidroituango when the communities have simply been ignored.

The COLCAP fell 0.08% , closing @ 1472.57pts. Pre auction, the Colcap was ending -0.24% thereby gaining 0.16%, during the last 5 minutes of trading with USD 4mn (11.5% of total vol) . Total volume was USD35mn. The most traded stocks were ECOPETROL (USD 8mn), PFBCOLOM (USD 6mn) and EXITO (USD 4mn), in terms of performance ETB (+1.65%), PFDAVVNDA (+1.42%) and ECOPETROL (USD 1.41%) all moved ahead whilst PFAVH (-1.63%) ,CLH (-0.83%) and PFCEMARGOS (-0.74%) had the day off.

The PESO is see-swing around and closed Wednesday 0.47% weaker at 3141 with good volume of USD1.4bn - we continue to expect strengthening.

The Bond market was sluggish with the benchmark 2024 1.5bps higher at 6.025% whilst the longer dated 2032 was also 2.6bps high at 7.09%

The data for Construction Licences finished 2018 where it spent most of the year - in December across the broader 302 municipalities there was a 20% YoY decline to 1,892,100 m3 - in both housing (-14.5%) & non-housing (-31.4%) there were significant declines.

Looking at the full year numbers they are negative although not to the same extent with housing down 6.2% and non-housing 0.9% for an overall decline of 4.9%. Licences are clearly a leading indicator and the those watching the construction sector will be hoping these numbers aren't pre-cursors for 2019. Over in the public sector there was much better news, which may well have an effect on the delayed 4Q GDP number as Civil Works disbursements rose 5.3% during the last 3 months of the year - the index rising to its highest level ever. Looking at the various categories we find advances in most sectors with the highest contributions coming from Mining/Turbines (+6.7%) & Roads/Tunnels (+4.4%) which between them contributed 98% of the increase. The only area that was negative in Q4 was water related projects such as dams & ports which fell 9.9%.