Fixed income up to 10.5%; shares at 26%, good options in 2025

The decrease in inflation and interest rates will cause the moderation of local debt securities, but will make variable income (shares) more attractive in the next 12 months, indicated a report from Visión Davivienda.

(Read here: ETFs, investments that are booming in Colombia: why?)

Likewise, the fiscal situation is tight and could impact the risk premium and the exchange rate; but at the same time, inflation presents risks derived from the climate and the adjustment in fuel prices.

This combination of factors will limit the room for rate cuts by the Bank of the Republic and although the placement of credit in the economy can be reactivated, its growth will continue to be very moderate; This could keep the liquidity conditions of credit institutions comfortable and thus accentuate the drop in short-term rates, indicates one of the asides of the report.

He also mentions that inflation-indexed securities look attractive both because of the margin they offer and because of the risks that prices continue to have in the economy.

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So far in 2024, the Colombian debt has maintained a positive behavior, in line with the progressive adjustment of inflation and with the beginning of the normalization of the monetary policy of the Colombian central bank.

When evaluating various investment alternatives in Colombian debt, the annual rate of return so far this year reaches 12.5%, he mentions. Additionally, it is clear that short and medium-term fixed rate securities were the ones that performed best.

When taking stock of factors in favor and against Colombian fixed income for 2025, the Visión Davivienda report indicates that the magnitude of the appreciations will continue, but is already more limited.
Thus, the level of the local public and corporate debt curves would remain above 8% in the first half of 2025.

Debt.

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The report mentions that the profits of the Colcap index would fall for the second consecutive year in 2024, but would grow 12% in 2025 as banks’ profits present better dynamics and the public services sector maintains the positive growth trend.

He warns that once again, liquidity is the main challenge of the market but analyzes that it is enthusiastically seen that Trading volumes begin to pick up.

That is one of the factors why the risk of reclassifying Colombia to a frontier market, from the current emerging market, dissipated for the moment and, on the contrary, “the horizon is positive”, states the Visión Davivienda report.

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That is why the report estimates “a fair MSCI Colcap level of 1,550 points, equivalent to a potential of 17%.”

(Follow here: Through tyba, from Credicorp, you can invest from US$ 1)

Likewise, he mentions that we must be aware of the evolution of the Pact for Credit program, the recovery of the financial system, the arrival of more neobanks and the regulation of the pension reform.

Additionally, it points out that the restructuring must continue to allow the separation of the financial business (Grupo Sura) and the non-financial business (Grupo Argos). Other events to follow will be the changes in Ecopetrol and an uncertainty that “It continues to be very high, according to Fedesarrollo’s Economic Policy Uncertainty Index in Colombia and taking into account that 2025 is a pre-electoral year.”

Visión Davivienda mentioned that the four main stocks that it recommends buying are, in order, Grupo Energía Bogotá given the stability and regulated nature of their businesses, Bancolombia for its profitability, Grupo Argos and that of Corficolombiana.

HOLMAN RODRÍGUEZ MARTÍNEZ
Portfolio Journalist