Monthly Andean Strategy Update - Setting new market upsides for 2015
August 6, 2014 (www.investorideas.com newswire) In July, the MILA 40 index increased by 2.8% (USD), led by Peru while Colombia and Chile were both negative for the month.
In Chile, we are introducing a 4,530 IPSA target for 2015YE, implying a potential upside of 15% from current levels. Decelerating GDP growth, moderating growth in corporate earnings, and political/regulatory noise stemming from the ongoing discussions in the senate are limiting an upward rerating in the local index (market trading within 1 standard deviation below its historical average). However we have a slightly positive view on the IPSA in the short term. Although volatility will remain until there is more visibility regarding the final design of the reform, and there is still some uncertainty regarding macro and corporate fundamentals for 2015, we believe Chiles recent underperformance has already priced in these uncertainties and therefore we could expect a return to a slightly more positive momentum in the IPSA as political reforms are resolved.
In Colombia, we are updating our 2014YE Colcap target while introducing a new target for 2015YE. We see moderate room for upside (+5%) for the remainder of 2014 and a 13% upside (16% including dividends) for 2015. Our estimates are grounded in the expectation that the growth in the Colombian economy will remain robust (GDP expected to grow 5% in 2014 and 2015). This is consistent with the BanReps decision in July to raise the repo rate by a further 25bps followed by an upward revision in its GDP growth estimate range from 3%-5% to 4.2%-5.8%. Regarding sectors, our view remains constructive on the banking industry and names linked to local demand.
July was positive in Peru (the IGBVL rose by 1.22%), driven by a good performance of mining companies following a rally in the price of zinc (8% MoM, 24% YoY). The month started with the market digesting a worse-than-expected June GDP figure of 1.8% (3.1% consensus) and a Central banks benchmark rate reduction of 25 bps (to 3.75% from 4%). At the end of the month, the government launched a stimulus package aimed to raise internal demand through increases in state employees salaries and pensions. Our top pick stocks are Minsur owing to mid term higher production of tin, whose positive price trend may restart, and Graña y Montero due to possible new mining contracts to be granted in the 2H2014.
Regards, Credicorp Capital
La información contenida en este mensaje es confidencial y para conocimiento exclusivo del destinatario. La información y opiniones contenidas en este mensaje pertenecen únicamente al remitente, excepto cuando en el cuerpo del mensaje se establezca lo contrario y el remitente esté autorizado para enviar dicha información con carácter definitivo y oficial de Credicorp Capital. La información relacionada con su cuenta, los extractos, informes financieros y de productos, sólo será vinculante en la medida en que sea remitida por los canales y en los formatos que Credicorp Capital determine. Las opiniones, conclusiones o cualquier otra clase de información contenida en este correo no relacionadas con los fines del negocio de Credicorp Capital, deben entenderse como personales y bajo ninguna circunstancia son avaladas por Credicorp Capital. Si usted ha recibido este mensaje por error por favor proceda a eliminarlo, y notificar al remitente. De cualquier manera, usted no debe usar, divulgar, revelar, distribuir, imprimir, copiar o adulterar en forma parcial o total este mensaje. Credicorp Capital no se hace responsable por la eventual transmisión de virus o programas dañinos por este medio. Credicorp Capital, no se responsabiliza por eventuales daños o alteraciones como consecuencia de la recepción o uso del presente mensaje.
This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp
Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.