We estimate Ipsa closing at 5.700 points, given macro conditions and EPS growth.

During 2017, the biggest winners have been emerging markets, among them Latin America, mainly due to substantial inflows to the region. Looking ahead, we estimate this trend will continue in 2018, even as the Fed shrinks its balance sheet, which we believe will have limited impact.

As per our sensibilization analysis, Ipsa’s EPS would grow ~20.8% in 2018, up from our initial projection of 16.4%, mainly explained by non-recurring earnings, particularly for EnelAM, EnelChile, CCU and Aes Gener. Without these effects (certainly not foreseeable last October), the Ipsa’s EPS would have “only” been growing 11.5%, a ~500bp drop with regard to the initial projection, mainly explained by worsening conditions in Brazil and Argentina.

One of the points of greatest strength is the favorable macro scenario and business confidence in Chile. In fact, growth estimates have been revised upwards, while our baseline scenario contemplates a better copper price by year-end 2018, when compared to estimates in October 2017 (date in which we set the previous Ipsa target).

Overall, under new macro conditions and EPS growth perspectives, we believe the IPSA will close at 5.768 points by year-end.