In local equities, our baseline scenario considers a 2021 IPSA target of 5,200 points (+7.0%). The domestic scenario will remain complex due to the political and institutional challenges we face in the coming months, but the external scenario offers some compensation. Valuations remain attractive in a long-term context, both in absolute terms and compared to other Latin American countries (25% discount in terms of P/E). 

Expected earnings continue to be revised upward. Improved earnings momentum and expectations, which has translated into improved cash flow dynamics.

Whether or not the third withdrawal of pension funds or other alternatives currently on the table are ultimately approved, and with quarantines being extended for longer, it is likely that the government will have to make an even greater fiscal effort anyway, thereby strengthening an already abundant liquidity environment. 

In sector terms, this year has seen a consolidation of the improvement in the most cyclical sectors most affected by the pandemic, such as consumer discretionary, real estate, and financials. 

However, the commodities sector remains our favorite and should continue to outperform, given that the outlook for underlying assets such as pulp and wood (CMPC, COPEC), iron (CAP), copper, and lithium (SQM) has strengthened further. There is room for multiples to expand, and we prefer to be more exposed to the external cycle.