Local assets continue to offer an attractive risk-return ratio.

• Short-term local economic dynamics continue to be dominated by transitory factors and high month-to-month volatility.
• By 2025, the Chilean economy is expected to grow by 2.3% year-on-year, a level similar to that of 2024 and close to trend levels. Unlike 2024, a year in which export growth had a significant impact on activity, in 2025, the recovery should be driven by a further increase in domestic demand, both consumption and investment.
• Although affected by the increase in electricity tariffs, inflation should resume its downward trend in 2025 (3.8%)inflation should resume its downward trend in 2025 (3.8%), but will not converge to 3.0% until 2026.
• This would not prevent the central bank from continuing to cut interest rates, to reach the neutral level by the middle of next year.
• However, we expect long rates to be sustained at higher levels due to external factors, and for the peso to remain weaker than expected.and that the peso will remain weaker than expected.
• In fixed income, we project a higher return on UF instruments relative to nominal instruments, relative to nominal instruments.
• We expect both central bank bonds and corporate bonds to outperform time deposits, with estimated spreads above 1.5%. In particular, two-year corporate bonds offer a favorable risk-return ratio. Within this segment, we prefer bank bonds.
• Considering the economic environment and interest rate projections, we recommend structuring portfolios with durations between 2 and 4 years.
• In equities, we should count on some drivers drivers for local equities:

1. More room for further monetary easing, as we expect the policy rate to end 2024 at 5.0% - down from 5.5% today - and converging to a neutral rate around 4.25% by the end of 2025.
2. An improvement in corporate earnings for this year and next year. Earnings growth of 5.4% during 2024 and 21.9% in 2025 (24.8% and 9.3%, respectively, when isolating SQM).
3. Highly discounted valuations, with the IPSA trading at ~9x P/U fwd 12M, a 30% discount to its 10-year averages.

• We project a 15% return for IPSA by the end of 2025, compared to current levels.

For more information, please refer to the attached report.

Humberto Mora

Investment, Finance, and Business Manager; Stockbroker