The Chilean market continues to outperform the region in both fixed income and equities. Over the course of 2025, local assets have shown remarkable remarkable resiliencedriven by solid fundamentals, consistent flows and a political environment that is starting to look more stable.

At Fynsa we maintain a constructive constructive and consistent visionChile continues to offer an attractive risk-return ratiosupported by discounted valuations, attractive real rates y structural catalysts not yet internalized by the market.

Political catalysts: a change of cycle with potential

The political spotlight has returned to center stage. Surveys point to a possible right-wing majority in possible right-wing majority in Congress, a scenarioCongress, a scenario unheard of in more than a decade.
A Congress with a pro-market majority would allow for the to advance key reforms -such as the corporate tax -such as the reduction of corporate taxes and the simplification of permits, favoring private investment, credit and institutional consolidation.

Historically, these periods of pro-growth political turnaround have been accompanied by re-rating and risk premium compression.
At Fynsa, we believe that this scenario is not yet incorporated into pricesprices, which opens space for a continuation of the continuity of the rally in local assets over the next over the coming quarters.

Macro context: recovery underway and solid fundamentals

Chilean economic activity continues to show signs of recovery signs of recoverywith a non-mining Imacec maintaining a positive trajectory, driven mainly by services and trade.driven mainly by services and trade. The domestic consumption is also showing signs of improvementsupported by future prospects of more stable financial conditions.

Taken together, these factors make for a more sustainable more sustainable expansionwhich supports our constructive view of local assets.

Fixed income: UF preference and short-medium duration

In fixed income, the balance between attractive carry and risk control remains at the heart of our strategy.

The Central Bank opted for a tactical tactical pause at 4.75% at its last meeting, consistent with a more gradualconsistent with a more gradual disinflation process than expected. At Fynsa, we estimate inflation of around 4% by 2025still above the target range, which reinforces the convenience of maintaining portfolios with UF exposure. UF exposureexposure, capable of preserving purchasing power and capturing positive real returns.

Axes of Fynsa positioning:

• Short-medium duration (2 to 5 years, depending on risk profile)shorter for conservative investors, longer for those seeking additional return.
• Predominance of UF over nominalto protect real returns in a scenario of persistent inflation.
• Emphasis on high quality credit (AA or higher), favoring solid bank and corporate issuers.favoring solid bank and corporate issuers.

Despite a more demanding fiscal scenario, Chile continues to stand out in the region for its institutional framework and macroeconomic prudence. institutional framework and macro prudencefactors that sustain investor confidence and maintain local debt as one of the best carry opportunities in Latam, both in peso local debt as one of the best carry opportunities in Latam, both in peso (CLP) and dollar (USD) denominated instruments.

Equities: an exceptional year with fundamentals to follow

The IPSA accumulated an increase of more than 35% in the year, placing it among the leadersranking among the leaders in Latin America. This advance is not only due to the electoral context, but to a history of structural recovery. history of structural recovery:

• Valuations still laggingwith the IPSA trading at 11.4x forward P/Ua 10% discount discount to its historical average and 23% with respect to emerging markets.
• Solid, cross-corporate results, with earnings growth in sectors such as banking, retail, energy and transportation.with earnings growth in sectors such as banking, retail, energy and transportation.
• Sectoral catalysts -such as the normalization of consumption, which reactivate stock market growth engines.

Banks: sector with solid fundamentals and still with upside

Chilean banks continue to show strength in profitability, efficiency and solvency, combining ROE above 20%, ROE, multiples at a discount and an and an orderly transition from inflation to growth.. In an environment of high real rates and tighter liquidity, the sector maintains a defensive profile with an attractive dividend yieldand a gradual acceleration in gradual acceleration in placements over the over the coming quarters, driven by the recovery of consumption and investment.

At Fynsa, we project that this rally could extend could extendsupported by still-attractive valuations and the possibility of an additional additional re-rating if a pro-market government and Congress consolidate.

Conclusion

At Fynsa we maintain our thesis:

• Fixed income: exposure. UF and short-medium durationtaking advantage of high real rates and controlling duration risk.
• Equities: maintain structural exposure to the IPSAwith a focus on banks, consumer and commodities.
• Catalysts: Potential pro-market majority, reactivation of private investment and valuations yet to normalize.

DISCLAIMER

Felipe de Solminihac
Head of Strategy