Leve recuperación en el volumen de negociación

A p r i l 1 7 , 2012
WEEKLY REPORT
IT’S THE FDI, STUPID!
Last week we analyzed the balance of payments in Colombia for 2011
as a whole, which shows that the current account (CA) deficit is fully
funded by long-term foreign investment flows from abroad, mainly those
corresponding to Foreign Direct Investment (FDI). Moreover, FDI from
abroad alone exceeds the CA deficit, suggesting that it is the single
most relevant capital flow behind the strength of the local currency.
Nonetheless, we also pointed out that Colombian FDI abroad reached
its highest level ever in 2011, which means that total net FDI (FDI in
Colombia, net of Colombian FDI abroad) only finances half of the CA
deficit. However, when looking at funds of capital flows that actually
went through the local exchange rate market (supply and demand of
foreign currency, which differs from balance of payments’ flows), it is
clear that total net FDI was and will continue to be the main driver of
currency appreciation.
NOTE: This English version of the weekly report only includes the main
editorial. The full Spanish version contains various financial markets’
sections (fixed income, money markets and rates, FX, stock markets,
and external markets), economic calendar and forecasts (see Informe
Semanal – Abril 16 de 2012).
Economic Research
Corficolombiana
(+57-1) 3538787
www.corficolombiana.com
Other reports (in Spanish):
Tesoro de oportunidad
Informe mensual de Renta Fija
(Abril 13 de 2012)
Baja corriente para un alto flujo
Informe Semanal
(Abril 9 de 2012)
Progreso nublado
Informe Semanal
(Abril 2 de 2012)
Todo con moderación
Informe Semanal
(Marzo 26 de 2012)
Obstáculos en el Camino
Informe Semanal
(Marzo 20 de 2012)
Mayor cautela
Informe Semanal
(Marzo 12 de 2012)
Menos TES
Informe mensual de Renta Fija
(Marzo 9 de 2012)
Con licencia para construir
Informe Semanal
(Marzo 5 de 2012)
Monitor de Inflación – Febrero de 2012
(Febrero 28 de 2012)
April 17, 2012
IT’S THE FDI, STUPID!
Andrés Pardo Amézquita
Last week we analyzed the balance of payments in Colombia for 2011 as a whole, which shows that the current
account (CA) deficit is fully funded by long-term foreign investment flows from abroad, mainly those corresponding to
Foreign Direct Investment (FDI) (see “Baja corriente para un alto flujo” in Informe Semanal – Abril 9 de 2012, in
Spanish). Moreover, FDI from abroad alone exceeds the CA deficit, suggesting that it is the single most relevant capital
flow behind the strength of the local currency. Nonetheless, we also pointed out that Colombian FDI abroad reached its
highest level ever in 2011, which means that total net FDI (FDI in Colombia, net of Colombian FDI abroad) only
finances half of the CA deficit. However, when looking at funds of capital flows that actually went through the local
exchange rate market (supply and demand of foreign currency, which differs from balance of payments’ flows), it is
clear that total net FDI was and will continue to be the main driver of currency appreciation.
The CA deficit in 2011 was USD10 billion, more than financed by a capital account surplus of USD13.3 billion. This
surplus is the result of USD27 billion of capital inflows and USD13.7 billion of capital outflows (Table 1). Among foreign
capital inflows, the most significant was that of FDI in Colombia, which reached its highest level ever at USD13.2
billion. Similarly, the most relevant capital outflow was that of Colombian FDI abroad at USD8.3 billion, also at a record
high.
Table 1. Capital account in the balance of payments 2010-2011 (figures in USD bn)
2010
2011
19.9
27.0
FDI in Colombia from abroad
6.9
13.2
Foreign portfolio investment from abroad
3.3
8.2
External loans and credits
9.7
5.6
8.1
13.7
6.6
8.3
Capital inflows
Capital outflows
Colombian FDI abroad
Other Colombian investments abroad (includes loans abroad)
Total capital account
1.6
5.4
11.8
13.3
Source: BanRep
Consequently, total net FDI flows, calculated as FDI in Colombia from abroad minus Colombian FDI abroad, were USD
4.9 billion in 2011, financing only half of the CA deficit for that year. Does this mean that total net FDI does not carry
enough weight, among net foreign capital flows, to explain the strength of the Colombian peso? In order to answer this
question it is necessary to look beyond the balance of payments, therefore we take a look at transactions of capital
flows in the local exchange rate market.
The main differences between exchange rate market and balance of payments transactions are the following: i)
exchange rate market data only account for currency transactions in the local market, thus affecting the exchange rate
level in the short term; and ii) balance of payments data also include transactions that are settled in bank accounts
abroad (compensation accounts, as defined by Colombia’s Central Bank) and those that do not require flows of funds
(for example, payments in kind or reinvestment of profits by corporations with FDI in Colombia), which do not
necessarily affect the exchange rate in the short term.
According to data of Exchange rate market transactions, net supply of foreign currency originated in capital flows in
2011 stood at USD15.6 billion (Table 2). In other words, among all foreign capital flows, the difference between sales
and purchases of foreign currency in 2011 was USD15.6 billion (more supply than demand). From this amount, the
sale of foreign currency corresponding to FDI in Colombia was USD15 billion, while the purchase of foreign currency
required to make payments of Colombian FDI abroad only reached USD1.1 billion. As a result, net supply of foreign
currency related to total net FDI (FDI in Colombia, net of Colombian FDI abroad) was USD14 billion. Therefore, total
net FDI accounted for 89.7% of total net supply of foreign currency originated in capital flows during 2011, and was
much higher than the USD11.7 billion of CA deficit reported in exchange rate market transactions.
2
April 17, 2012
Table 2. Net supply of foreign currency originated in capital flows 2010, 2011 and 2012 (figures in USD bn)
2010
2011
1T12
9.1
14.0
4.1
9.5
15.0
4.2
-0.4
-1.1
-0.1
2. Portfolio investment
1.5
1.7
0.7
3. Net private lending
0.7
3.8
0.9
4. Net public lending and others
4.1
-3.9
-2.6
15.3
15.6
3.1
1. Total net FDI (A+B)
A. Net FDI in Colombia from abroad
B. Colombian FDI abroad
Total capital flows (1+2+3+4)
Source: BanRep. Calculations by Corficolombiana
Note: Negative flow represents net demand of foreign currency
There is no doubt that total net FDI flows continue to have the most weight among those in the capital account, and
they are responsible for the bulk of foreign currency supply in the local exchange rate market. This trend has continued
throughout 2012 (Table 2): in 1Q12 net supply of foreign currency from total net FDI was USD4.1 billion, even
surpassing the USD3.1 billion of net supply from all capital flows (other types of capital flows have generated net
demand of foreign currency), while the CA deficit only reached USD2.3 billion. These dynamics suggest that, in terms
of capital flows, FDI will continue to be the main driver of COP appreciation, backed by strong local economic
fundamentals and high liquidity abroad. As a result, we reaffirm our exchange rate forecast for 2012 year-end, at 1750
COP/USD.
Note: For a further explanation of the differences between exchange rate market and balance of payments transactions
see “IED: Motor de la revaluación” in Informe Semanal – Abril 25 de 2011 (in Spanish).
.
3
April 17, 2012
ECONOMIC RESEARCH CORFICOLOMBIANA
Andrés Pardo Amézquita
Head of Economic Research
(+57-1) 3538787 Ext.6165
[email protected]
Carmen Salcedo Saldaña
Fixed Income Analyst
(+57-1) 3538787 Ext. 6105
[email protected]
Paula Andrea Cifuentes Henao
Macroeconomics Analyst
(+57-1) 3538787 Ext. 6139
[email protected]
Luis Omar Herrera Prada
Foreign Exchange Analyst
(+57-1) 3538787 Ext. 6107
[email protected]
Julio César Romero A.
Economic Research Analyst
(+57-1) 3538787 Ext. 6164
[email protected]
Juan Sebastián Betancur
Student Intern
(+57-1) 3538787 Ext. 6112
[email protected]
AdvertenciaEste informe y todo el material que incluye, no fue preparado para una presentación o publicación a terceros, ni para cumplir requerimiento legal alguno,
incluyendo las disposiciones del mercado de valores.
La información contenida en este informe está dirigida únicamente al destinatario de la misma y es para su uso exclusivo. Si el lector de este mensaje
no es el destinatario del mismo, se le notifica que cualquier copia o distribución que se haga de éste se encuentra totalmente prohibida. Si usted ha
recibido esta comunicación por error, por favor notifique inmediatamente al remitente telefónicamente o a través de este medio.
La información contenida en el presente documento es informativa e ilustrativa. Corficolombiana S.A. no extiende ninguna garantía explícita o implícita
con respecto a la exactitud, calidad, confiabilidad, veracidad, integridad de la información presentada, de modo que Corficolombiana no asume
responsabilidad alguna por los eventuales errores contenidos en ella.. Las estimaciones y cálculos son meramente indicativos y están basados en
asunciones, o en condiciones del mercado, que pueden variar sin aviso previo.
La información contenida en el presente documento fue preparada sin considerar los objetivos de los inversionistas, su situación financiera o
necesidades individuales, por consiguiente, ninguna parte de la información contenida en el presente documento puede ser considerada como una
asesoría, recomendación u opinión acerca de inversiones, la compra o venta de instrumentos financieros o la confirmación para cualquier transacción.
La referencia a un determinado valor no constituye certificación sobre su bondad o solvencia del emisor.
Corficolombiana S.A. no asume responsabilidad alguna frente a terceros por los perjuicios originados en la difusión o el uso de la información
contenida en el presente documento.
Certificación del analista
El (los) analista(s) que participó (arón) en la elaboración de este informe certifica(n) respecto a cada título o emisor a los que se haga referencia en
este informe, que las opiniones expresadas se hacen con base en un análisis técnico y fundamental de la información recopilada, que se encuentra(n)
libre de influencias externas. El (los) analista (s) también certifica(n) que ninguna parte de su compensación es, ha sido o será directa o indirectamente
relacionada con una recomendación u opinión específica presentada en este informe.
Información relevante
Algún o algunos miembros del equipo de Investigaciones Económicas poseen inversiones en alguno de los emisores sobre los que está efectuando el
análisis presentado en este informe, en consecuencia el posible conflicto de interés que podría presentarse se administrará conforme las disposiciones
contenidas en el Código de Ética aplicable.
Corficolombiana S.A. o alguna de sus filiales ha tenido, tiene o posiblemente tendrá inversiones en activos emitidos por alguno de los emisores
mencionados en este informe, su matriz o sus filiales.
Las acciones de Corficolombiana S.A. se encuentran inscritas en el RNVE y cotizan en la Bolsa de Valores de Colombia por lo tanto algunos de los
emisores a los que se hace referencia en este informe han, son o podrían ser accionistas de la Corficolombiana S.A..
Corficolombiana S.A. hace parte del programa de creadores de mercado del Ministerio de Hacienda y Crédito Público, razón por la cual mantiene
inversiones en títulos de deuda pública.
Alguno de los emisores mencionados en este informe, su matriz o alguna de sus filiales han sido, son o posiblemente serán clientes de Corficolombiana
S.A. o alguna de sus filiales.
Alguno de los emisores mencionados en este informe, su matriz o alguna de sus filiales han sido, son o posiblemente serán clientes de Grupo Aval
Acciones y Valores S.A. o alguna de sus filiales.
4