In a macroeconomic context still marked by inflationary pressures inflationary pressures y mixed signals from the global scenarioat Fynsa, we reaffirm our constructive constructive outlook for local assetsin both fixed income and equities. We recommend a tactical approach, designed to capture risk-adjusted returns in an efficient manner, prioritizing strategies that combine risk-adjustedprioritizing strategies that combine protection against inflationary scenarios and valuation opportunities.

In fixed income, the Central Bank's recent decision to maintain the Monetary to maintain the Monetary Policy Rate (TPM) at 5.0%, reflects a prudent reflects a prudent stance, focused on monitoring inflation which, although it has shown signs of moderation, is still above the target range, remains above the target range.. This view was confirmed in the March IPoMwhere the Central Bank adjusted upwards its inflation projection for 2025 to 3.8% , while theto 3.8% , while market market swaps put it at around 4.3% , reflecting still latent inflationary risks.reflecting still latent inflationary risks.

From the growth perspective, the IPoM also revised up the range for 2025 from 1.5%-2.5% to 1,75%-2,75%driven by improved exports and a rebound in consumption, particularlyparticularly by demand from non-residents non-residents (mainly Argentines).. However, the report warns that this improvement is transitory. transitoryThe report warns, however, that this improvement is transitory, since for 2026 and 2027 the expansion range between 1.5% and 2.5% is maintained. Against this backdrop, the Central Bank projects a stable stable TPM at 5.0% for a prolonged period of timewith cuts only towards the end of the year, in an environment of high global uncertainty and domestic pressures for high global uncertainty and domestic cost pressures..

In this context, we see a clear opportunity in fixed income strategies highly indexed to the UF and with limited durations.. Our recommendation focuses on portfolios with durations between 2 and 4 years, adjusted to the risk profile of each client, prioritizingadjusted to each client's risk profile, prioritizing instruments of high credit quality (AA or high credit quality (AA or higher) and at least and with at least 90% exposure in UF. This positioning allows us to protect the portfolio against inflation, while at the same timewhile capturing attractive real capturing attractive real ratesespecially at the short end of the curve, where the upward correction in inflationary upward correction in inflation expectations has opened up new capital gains opportunities. has opened up new opportunities for capital gains. In addition, it is a strategy with low sensitivity to low sensitivity to possible interest rate hikes, which makes it even more relevant.which is even more relevant considering an uncertain international scenario. uncertain international scenarioThis is even more relevant considering the uncertain international scenario, marked by trade tensions, geopolitical risks and greater financial volatility. At the local level, the Central Bank has adopted a more cautious tone Central Bank has adopted a more cautious toneThe Central Bank has adopted a more cautious tone, awaiting the evolution of the main domestic macroeconomic variables and the external environment, reinforcing the need to maintain a defensive but efficient approach in fixed-income management.

In equities, we have updated our baseline scenario, adjusting upwards the IPSA target to 8,300 points (from 7,700 points by the end of 2025). IPSA target to 8,300 points (from 7,700 points) by the end of 2025.. This revision responds to a combination of factors that we consider structural: the legislative progress of the pension reform legislative progress of the pension reformwhich improves the sustainability of the system and the outlook for growth; a weakening of the global dollar weakening of the dollar globally, which historicallywhich historically favors emerging assets; an upward bias in the price upward bias in the price of copper, driven by adriven by a scenario of market market deficit in the face of growing demand, especially fromespecially from sectors such as energy transition and electromobility; and a broader and more homogeneous and homogeneity in the growth of corporate earnings, with companies from different sectors showing awith companies from different sectors showing a more synchronized and sustained recovery in their results.

It should be noted that, even with this upward revision, the IPSA scenario of IPSA at 8,300 points is still conservative from a valuation perspective. from a valuation perspective. At that level, the index would equal the emerging markets multipleat that level, the index would match the multiple of emerging markets, when historically Chile has traded at a premium of approximately 12% on a P/E basis over the last decade. over the last decade.

In sectoral terms, the banks banks banks continue to be one of the main pillars of our positioning, benefiting from the inflationary inflationary momentumthe recovery of domestic consumption recovery of domestic consumption, better marginsand better margins, and lower levels of provisions. The consumer consumption sector also presents attractive valuations, and isand is strengthened by the economic improvement in Argentina. As for commoditieswhile the sector remains underweight, lithium, which is lithium continues to show a misalignment misalignment between price and fundamentalsalthough recent dynamism in mergers and acquisitions mergers and acquisitions could anticipate a normalization towards levels that would energy transition to 2030 is feasible..

In summary, local assets continue to offer relevant value opportunities. In fixed income, the combination of high accrued inflation, attractive real rates and a monetary policy that is likely to remain contractionary for a longer period of timereinforces the convenience of low duration, high quality UF strategies, with low duration and high quality. In equities, the upward upward revision in earningsthe progress of structural reforms reforms and a possible change in the political cycle in 2025The environment is conducive to a sustained revaluation of the Chilean sustained revaluation of the Chilean stock market..

Felipe de Solminihac
Head of Strategy