Colombia vio crecer  su economía de forma paulatina el pasado año, expandiendo un 4.3 por ciento en el 2013. No obstante, la 4ta mayor economía de América Latina crecerá de forma notable durante los próximos cinco años. Esto se debe a las intervenciones por parte de instituciones públicas y privadas, con la única finalidad de promover el desarrollo del ámbito comercial y reducir la exclusión social. En otras palabras, el crecimiento de la economía Colombiana será catalizada principalmente por el sector de construcción e infraestructura.

No obstante, debe tenerse en cuenta que el peso Colombiano podría verse afectado por las siguientes causas:

   1. Continúa reducción de compra de activos por parte del Banco de la Reserva Federal de los EE.UU., y posible aumento de la tasa de interés en el 2015.

 2. Crecimiento económico moderado de la Unión Europea y zona euro; así como el posible Flexibilización Cuantitativa que el Banco Central Europeo (ECB) llevaría a cabo para combatir el estancamiento económico.

  3. Una reducción de la inversión directa extranjera, y retos que podrían generarse en el nuevo programa de cuarta generación de concesionales viales (4G).

Colombia es uno de los países con mayor potencial de crecimiento a largo plazo, no tan solo en la región Latino Americana, pero a nivel mundial. En la pasada década, el PIB per cápita se ha duplicado, y ha habido un incremento robusto en la inversión tanto pública como privada. Esto se debe a un incremento exorbitante en la seguridad interna y la amplia diversificación económica que enriquece al país. Colombia, miembro de la Alianza del Pacifico (AP), es mayor exportador de petróleo, oro, café, flores, carbón, entre otros.

Instituciones internacionales se han percatado del gran potencial que tiene Colombia. La aseguradora Coface ha incluido Colombia dentro de su lista de países “neo-emergentes”, llamada los PPICS (Perú, Filipinas, Indonesia, Colombia y Sri Lanka). Por otro lado, The Economist Intelligence Unit, ha listado su acrónimo de un grupo bastante prometedor, los CIVETS (Colombia, Indonesia, Vietnam, Egipto, Turquía y Sudáfrica).

‘Boom’ De Infraestructura Reforzará Economía

BMI View: Seguimos siendo optimistas hacia la industria de la construcción en Colombia en el corto y mediano plazo. Como tal, pronosticamos un sólido crecimiento real de 8,4% en 2014, cuando esperamos que la adjudicación de grandes proyectos de infraestructura a realizarse. Este panorama positivo es apoyado por un mejor ambiente de negocios y un oleoducto fuerte de proyectos, especialmente en el sector del transporte - que sigue representando la mayor proporción de proyectos de infraestructura - y el segmento de infraestructura de energía y servicios públicos. Fuerte crecimiento en el año 2014 es una continuación de una tendencia que surgió en el 2013, cuando la industria experimentó un crecimiento estimado de 10,5%.         

Fuente: www.businessmonitor.com (Traducido al Español)

Para una economía incentivar la productividad y el desarrollo económico sostenido, la inversión en infraestructura es ineludible. En las pasadas décadas, Colombia ha mostrado una dilación (<1% del PIB) en la inversión de la misma, en comparación a otras economías emergentes. No obstante, es preciso resaltar el entorno actual del sector de infraestructura colombiano. La Agencia Nacional de Infraestructura (ANI) ha planteado una serie de proyectos que suman un aproximado de US$47bn en un plazo de cinco años. Entre ellos, se encuentra el programa de Cuarta Generación de Concesiones Viales (4G), el cual consiste de un total de cuarenta obras y sobre 8,000km de carretera. Inclusive, la Agencia Nacional de Infraestructura (ANI) espera que contribuya alrededor de 0.5 puntos porcentuales del crecimiento del PIB en los próximos cinco años. También para resaltar, el Consejo Superior de Política Fiscal (Confis), aprobó un total de diez concesiones viales con un valor de US$12.79bn, pertenecientes al Programa Autopistas para la Prosperidad. Se espera que el sector de infraestructura en Colombia conlleve más de 3 por ciento del PIB en los próximos años.

Sector Inmobiliario Crecerá en el 2014

Es evidente que durante el año previo, Colombia se destacó en el sector de la construcción, creciendo 15.4 por ciento en construcción de edificaciones residenciales. El sector inmobiliario, el cual proveerá un continuo soporte al desarrollo del sector en el 2014, es producto del presente auge en la construcción de Viviendas de Interés Social (VIS). Las VIS están dirigidas a familias de ingreso medio y medio-bajo.

Adicionalmente, el vigente marco inmobiliario muestra soporte al crecimiento de otros sectores; en especial el minero, el cual ha visto crecer la demanda de cemento y petróleo. Sin embargo, uno de los retos que podrían surgir sería el aumento de los precios de viviendas. Para contrarrestar este evento, debe haber una mejora en los balances de hogares.

Inclusión Financiera Sigue Siendo Un Desafío

Colombia carece de un sistema financiero inclusivo a nivel nacional. Según la Encuesta Global de Inclusión Financiera del Banco Mundial (Global Findex), tan solo un 30 por ciento de la población Colombiana posee algún tipo de cuenta bancaria. Para incentivar un crecimiento sostenido, las bancas deben promover sus servicios en áreas rurales y con baja densidad poblacional. También, las entidades financieras y organismos reguladores deberán crear nuevos canales de acceso para ampliar la cobertura de servicios bancarios. Esto brindaría innumerables beneficios tales como: disminuir costos transaccionales, menor uso de efectivo, reducir corrupción y actividades ilícitas, incrementar la demanda interna, incitar el ahorro e inversión, etc. La profundización del canal tecnológico (Internet Banking) debe ser el primero en la lista de promoción principalmente debido a su accesibilidad.

Por otra parte, es preciso resaltar la presente ley de inclusión financiera que se viene debatiendo en la Comisión Tercera del Senado. La nueva ley fue descrita por la agencia de noticias, Colprensa, de tal manera:

            “La iniciativa busca la creación de entidades especializadas en pagos, ahorros y depósitos, que según el ministro de Hacienda, Mauricio Cárdenas, estarán facultadas para captar depósitos, y no prestarán ni invertirán recursos del público; sino que éstos deberán ser depositados en el Banco de la República.”

Perspectiva de Inversión

Colombia tiene un increíble potencial de crecimiento durante los próximos cinco años. El desempleo ha reducido substancialmente en la pasada década, posicionándose alrededor de 8.7 por ciento en el 2013 de una población de 47 millones. La inflación permanece estable, culminando el mes de Abril en 2.51 por ciento; entre la meta del Banco de la Republica (2% - 4%). De igual manera, el gobierno ha optado medidas para desplazar la violencia interna y el narcotráfico, moldeando un país más seguro para inversionistas extranjeros. Una forma sencilla de exponerse directamente a este mercado Andino es tras los ETFs: $ICOL - $GXG - $COLX. Ambas agencias de calificación, Moody’s y Standard & Poors, colocaron un grado adecuado en la deuda soberana de la nación: BBB y BAA3, respectivamente.

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Colombia saw its economy grow gradually last year, expanding 4.3 per cent in 2013. However, the 4th largest economy of Latin America will grow significantly over the next five years. This is due of interventions by both public and private institutions, with the sole purpose of promoting the development of the commercial sphere and reducing social exclusion. In other words, the growth of the Colombian economy will be catalyzed primarily by the construction and infrastructure sector.

Nevertheless, it should be noted that the Colombian peso might be affected by the following factors:

1. Continued reduction of purchases of assets by the U.S. Federal Reserve Bank and possible interest rate increase in 2015.
2. Moderate economic growth in the European Union and Euro zone; as well as the possible Quantitative Easing the European Central Bank (ECB) would carry out to combat economic stagnation.
3. A reduction in foreign direct investment (FDI), and challenges that may arise in the new program of fourth generation of road concessions (4G).

Colombia is one of the countries with greatest growth potential in the long run, not just in the Latin American region, but globally. In the past decade, per capita GDP has doubled, and there has been a robust increase in both public and private investment. This is due to an exorbitant increase in internal security and the broad economic diversification that enriches the country. Colombia, member of the Pacific Alliance (AP), is a major exporter of petroleum, gold, coffee, flowers, charcoal, among others.

 

International institutions have noticed the great potential that Colombia has. The insurance company Coface has included Colombia into its list of "neo-emergent" countries, called the PPICS (Peru, Philippines, Indonesia, Colombia and Sri Lanka). On the other hand, The Economist Intelligence Unit, has listed their acronym for a very promising group, the CIVETS (Colombia, Indonesia, Viet Nam, Egypt, Turkey and South Africa).

Infrastructure ‘Boom’ Will Bolster Economy

BMI View: We remain optimistic towards the construction industry in Colombia in the short to medium term. As such, we forecast solid 8.4% real growth in 2014, when we expect the awarding of large infrastructure projects to take place. This positive outlook is supported by an improving business environment and a strong pipeline of projects, particularly in the transport sector - which continues to represent the highest proportion of infrastructure projects - and the energy and utilities infrastructure segment. Strong growth in 2014 is a continuation of a trend that emerged in 2013, when the industry experienced double-digit growth estimated at 10.5%. Source: www.businessmonitor.com

For an economy to encourage productivity and sustained economic development, infrastructure investment is inevitable. Over the past decades, Colombia has shown a delay (< 1% of GDP) in the investment of its infrastructure in comparison to other emerging economies. However, it is necessary to highlight the current environment of the Colombian infrastructure sector. The National Agency of Infrastructure (ANI) has raised a series of projects valued at approximately US$47 billion in a period of five years. Among them, is the 4G program of road concessions, which consists of a total of forty projects and over 8,000km of road. As a result, the ANI expects it to contribute around 0.5 percentage points of GDP growth over the next five years. Moreover, the Superior Council on Fiscal Policy (Confis), approved a total of ten road concessions valued at US$12.7 billion, belonging to the Highways for Prosperity Program. Colombia’s infrastructure sector is expected to account over 3 per cent of GDP in the coming years.

                                              

                                       

Construction Sector Will Grow In 2014

It is clear that over the past year, Colombia stood out in the construction sector, growing around 15.4 per cent in construction of residential buildings. Real estate, which will provide a continuous support to the development of the sector in 2014, is the product of the present boom in Social Interest Housing (VIS). The VIS are aimed at medium and medium-low income households.

Additionally, the existing construction framework shows support for growth of other sectors; especially mining, which has seen a growing demand for cement and oil. However, one of the challenges that may arise could be an increase in housing prices. To counter this event, there must be an improvement in household balance sheets.

                              

Financial Inclusion Still A Challenge

Colombia lacks of an inclusive financial system nationwide. According to the World Bank’s Global Inclusion Financial Index (Global Findex), only 30 per cent of the Colombian population own some kind of bank account. To encourage sustained growth, banks should promote their services in rural areas and with low population density.In addition, financial institutions and regulators should create new channels of access to expand the coverage of banking services. This would provide countless benefits such as: reduction of transactional costs, less use of cash, reduction of corruption and illegal activities, increase domestic demand, encouragement to initiate savings and investment accounts, etc. The deepening of the technology channel (Internet Banking) should be first on the promotion list mainly because of its accessibility.

Moreover, it is necessary to highlight the law of financial inclusion which is under discussion in the Third Committee of the Senate. The new law was described by the news agency, Colprensa, as follows:

“The initiative seeks the creation of entities specializing in payments, savings and deposits, which, according to the Finance Minister, Mauricio Cardenas, will be empowered to take deposits, and will not lend or invest public resources; but that these must be deposited in the Bank of the Republic."

Investment Outlook

Colombia has incredible growth potential during the next five years. Unemployment has decreased substantially over the past decade, standing around 8.7 per cent in 2013 of a 47 million population. Inflation remains stable, ending the month of April at 2.51 per cent; between the central bank’s target (2% - 4%). Similarly, the Government has chosen measures to diminish internal violence and drug trafficking, shaping a safer country for foreign investors. A simple way to get direct exposure to this Andean market is through the ETFs: $ICOL - $GXG - $COLX. Both rating agencies, Moody's and Standard & Poors, placed a medium grade in the nation’s sovereign credit: BBB and BAA3, respectively.

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     In 2014, prevails a context of heightened uncertainty in the global economy, which is expected to reach an annual growth below 4% by 2015. However, the vast majority of analysts foresee another buoyant year for developed stock markets. The reduction of the monetary stimulus by the Federal Reserve will result in periods of volatility in both emerging and developed economies. Even though further reduction of financial tensions has supported growth in the past, one should be aware of the various risk factors that could further harm the emerging economies. One of the main threats to the Peruvian economy would be the case of a sharp deceleration in China. This event would have an impact on the prices and volumes of commodities exported by Peru. The outlook of many emerging economies is being threatened by a continued reduction in capital inflows. Nevertheless, the present macroeconomic framework reflects the low likelihood of the occurrence of a systemic risk in any of the developed economies.

Expanding Economy   
  
    Peru’s GDP expanded at a rate of 5.2% in 2013; a much lower figure than the 6.3% for the previous year. Notwithstanding, the BBVA bank estimates that the Peruvian economy will grow moderately in 2014, to a figure of 5.7%. Despite the slowdown last year, Peru remains one the countries with most dynamic economies in the region and with best growth potential in a long-term perspective. Since the early 90's, Peru has implemented a number of structural changes in order to increase domestic and external demand, and its presence in the global framework.

Stable Political Environment
   
  The political ambiance for this coming year will be dominated by regional and municipal elections concerning candidature for the presidential elections that will be held in 2016. Presently, Ollanta Humala is the president of the Peruvian nation. Humala has made a great effort in sustaining the rising middle class that demands a better quality of public services and infrastructure. Additionally, reforms in the health and education sectors have been of great transcendence in the present government, which attempts to reduce high levels of poverty and social exclusion. Humala has been quite optimistic about the Peruvian economy, “We have maintained strong economic growth that has stood out internationally for its quick progress and its solidity in the face of the recent world economic crisis."

     Low Public Debt and Increasing Confidence
     
     Another detail that justifies the positive economic outlook for Peru, is the level of public debt to its GDP. In 2013, this stood at 18.1%, compared with an average of 31% for Latin America, and 76% for the Caribbean. Such level of debt, allows the country to implement easy monetary policies, in the event that a systemic risk arise in the global markets. In addition to the low interest rates that have helped the financing of budget deficits, the Peruvian economy has seen increasing private investments, which are the result of an improving business confidence. Both business and consumer confidence index ended the year 2013 positively: 59 and 52, respectively; a figure greater than 50 indicates that the economy is expanding.

Slow Shift to a Consumerist Society    

      For Peru to sustain such growth rate, it must make greater efforts in diversifying its economy to a consumerist society less dependent on the mining industry. The chart below indicates a converging relationship of domestic demand and exports, estimating a possible variation of the Peruvian economy towards a more consumerist state. Overall, the sectors related to domestic demand (commerce, services, etc.), will continue to provide long-term support. However, the country will see a substantial rise in exports over the next two years due to the recent influx of large mining projects.

Growing Mining Sector

BMI View: Peru's mining sector will grow steadily over the coming years. Mining sector will grow an average of 4.4% a year through to 2017, reaching a value of US$23.1bn.  Peru will remain a key global producer of other metals such as zinc, silver, and tin.

     The fall of the prices on commodities in 2013 marked a deceleration in Peru’s economy. Peru is the third largest exporter of copper in the world, and is expected to double its production by 2016. According to Banco de la Nación, a Peruvian bank, incoming projects will elevate copper production around 75% by 2015. Although the volume of these exports will be higher, prices will be linked largely to the demand for metals from China. Among the new projects that will be developed in the future, there are: Toromocho, Las Bambas, Constancia, the extensión of Antamina, Cerro Verde, Antapaccay, and Marcona. The vast majority of Latin American countries base their economy mainly on the export of raw materials. The advantage held by Peru is that in comparison to other Latin American countries, different metals broadly diversify their mining sector; Peru is a leading producer of copper, silver, tin, lead, zinc, and gold.   

Social Inclusion Still an Issue

    In the coming decade, the Peruvian government should foster the social inclusion of deprived areas by improving infrastructure and access to public services. Among the main problems faced by Peru, is the exclusion of a large part of the population to basic services. About 24% of the population resides in rural or marginal areas, and over 6% of the population is illiterate. The average expenditure on education to GDP ratio over the past few years has been around 2.7%; a deplorable figure. The goal of all emerging economies, as the name suggests, is to see a middle class emerge. The problem with Peru, is that much of the economic growth of the past decade has been the result of prolonged foreign investments, rather than an increase in domestic demand.

Investment Outlook

   Personally, I would not consider buying (EPU) if I were to hold it for 6-to-12 months, however, I am very bullish over the next couple of decades. Peru is a country with a high long-term growth potential. It is possible that in a social and economic standpoint, Peru is still decades behind other countries of the region. However, the pronounced attempt to diversify its economy, and the vast array of natural resources, indicates the potential growth for the nation. Both rating agencies, Moody's and Standard & Poor's, placed a lower medium grade in the nation sovereign credit: Baa2 and BBB+, respectively.

Alexander Schachter

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In 2013, global markets were characterized by an outflow of emerging markets portfolios aimed at developed nations who wanted to strengthen their local currency. In previous years, developing countries have enjoyed low interest rates from developed markets. This event has led to an increase in the value of exports in emerging economies, as well as creating a greater demand in the domestic market. Unfortunately, 2014 might see an increase of such rates, affecting the cost of financing of Chilean business. This occurrence could further push commodity prices that have been victims of a lousy 2013. The MSCI Emerging Markets Index was down 5% for the year.

In 2014, Chile is possibly threatened by the repercussions of events that could arise in larger economies. The first risk is the volatility that may occur in the markets after the Federal Reserve decided to start tapering its bond-buying program to $ 75 billion a month starting in January. Nevertheless, the tapering could even benefit the Chilean economy, indicating a strengthening in global trade and a recovered United States. To sustain the rally, the U.S. needs to see strong earnings growth for the year ahead.

The second challenge that Chile may face would be a rise of new tensions in the Eurozone. However, recent economic data provide evidence that the European region is improving and has led investors back to the markets with easy money policies; the European stock market posted a 17% return for the year 2013. Morgan Stanley has stated that, "2014 should be the year when we find out whether we get ‘wish fulfilment’ or whether the region remains condemned to a long and hard slog.”

The third threat to the Chilean economy would be a slower economic growth for the second largest economy of the world. China currently is Chile's largest trading partner by volume. China is also the largest copper consumer worldwide, accounting for nearly 40% of the global demand. Lower demand of copper from China could push metal prices even lower, affecting greatly the Chilean economy. In the past four decades, Chile has made a remarkable effort diversifying its economy apart from copper. In 1970, copper accounted nearly 75% of all Chilean exports, and today it only amounts for 50%. Thus, falling prices of the metal, would drastically affect the mining industry. This would bring about a ripple effect across multiple sectors of the economy, including construction and other related services. Moreover, a stronger dollar could also push prices of commodities even lower.

The fall of copper in 2013 marked a deceleration in Chile’s economy. Copper stands at USD3.342 a pound according to COMEX latest data. GDP growth in Chile will reduce in 2014 due to lower investment activity in the mining sector. Despite the slowdown, Chile’s growth is greater than the estimated average for Latin America. According to the Central Bank of Chile, the economy will grow between 3.75% and 4.75%. The inflation target determined by the Central Bank of Chile is set to 3% for the next two years; currently the CPI stands around 3%. To protect the value of the Chilean Peso, inflation should remain stable and within the proposed range; One Dollar buys $532.90 Chilean Pesos according to the New York Times. Low inflation would also eventually boost employment growth and protect low incomes households from an increase in prices. Past November data shows unemployment rate for Chile at 5.7%.

The political scenario for Chile in 2014 will be affect by the new mandate of president Michelle Bachelet, who served as president for the 2006-10 term. Bachelet will take the initiative to implement a number of reforms, in order to redistribute and reduce income inequality. One of Bachelet’s reforms indicates an increase of corporate tax from 20% to 25% within 4 years. Bachelet also plans to remove the so-called Taxable Profits Fund, which gives companies permission to defer domestic tax payments. The education reform will also play a major role under this administration as she based much of her electoral campaign on this premise. Chile will invest about 5% of GDP on education, an increase of 33% from previous year.

One detail that has alienated many investors from Latin America and the Caribbean is the level of corruption and political instability of the region. In recent years, the Chilean government has taken measures to improve the management of public funds and increase transparency. Both rating agencies, Moody's and Standard & Poor’s, placed a high grade in the nation sovereign credit: Aa3 and AA-, respectively. Chile is one of the best governed nations and has the best sovereign credit in Latin America and the Caribbean.

Alexander Schachter

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Recommended Documentary: The Midas Formula: Trillion Dollar Bet

"The history behind perhaps the greatest formula ever created in finance: the Black-Scholes-Merton options pricing model. Two of its creators were awarded the Nobel Prize in Economics in 1997. A year later their hedge fund Long Term Capital Management (LTCM) had collapsed with staggering losses of $100 billion due to significant leverage of the strategy."


Alexander Schachter read more

Recommended Documentary: The Wall Street Code

"A thriller about a genius algorithm builder who dared to stand up against Wall Street. Haim Bodek, aka The Algo Arms Dealer."


Alexander Schachter read more

Recommended Documentary:  Money & Speed: Inside the Black Box

"A thriller based on actual events that takes you to the heart of our automated financial world. Based on interviews with those directly involved and data visualizations up to the millisecond, it reconstructs the fastest and deepest U.S. stock market plunge ever." VPRO DIGITAAL


Alexander Schachter read more

If the resolution does not show up well, watch on Youtube:

http://youtu.be/4BwIvTXkGYc

I also posted each individual chart of my watchlist in the previous post.

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AKRX

GPRE

FENG

AFOP

HIMX

MKTG

QLYS 

SBGI

PACB  

SSH

Alexander Schachter

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$LGF DAILY

$RMTI DAILY

$BITA DAILY

$BITA SIMPLE OHLC

$NM DAILY

$POR DAILY

Alexander Schachter

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$CPRT DAILY

 $CPRT DAILY ZOOM

$VCI DAILY

$CODI DAILY

                                                                       $CHL DAILY

   note: wp=weak pivot  mp=medium pivot  sp=strong pivot

Alexander Schachter

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