1. XXXII Foro: “Las perspectivas económicas para el 2014“
Lima – December, 2013

2. p.1
Section 1
The Macro Outlook

3. The Global Scenario: Muddling Through
p.2
US and Europe: GDP Growth
Commodity Price Evolution
Tapering by the Federal Reserve
China: GDP Growth
3.0
90
80
Hawkish
70
Base case
60
Dovish
2.5
Hawkish
Base case
2.0
Dovish
50
1.5
40
1.0
30
20
0.5
10
0.0
0
4Q13
2Q14
Source: Santander
4Q14
2Q15
4Q15
4Q13
2Q14
4Q14
2Q15
4Q15

4. p.3
The Weight of Emerging Markets and LatAm in the World
Weight of EM in Different Parameters (% of World)
Weight of LatAm in Different Parameters (% of World)
7.2%
7.1%
4.7%
3.3%
2.6%
2.1%
GDP-PPP
Sources: IMF, World Bank, Bloomberg and Santander
Population
Market
% in MSCI
Capitalization
ACWI
Listed
Companies
% of Global
Funds AUM
1.8%
Traded
Volume

5. The Weight of Emerging Markets and LatAm in the World
Sources: IMF, World Bank, Bloomberg and Santander
p.4

6. The Weight of Emerging Markets and LatAm in the World
Sources: IMF, World Bank, Bloomberg and Santander
p.5

7. The Weight of Emerging Markets and LatAm in the World
Sources: IMF, World Bank, Bloomberg and Santander
p.6

8. Latin America: A Varied Group of Peculiar Emerging Economies
Private Consumption
USA
68.6
Mexico
64.7
Brazil
63.0
Colombia
60.9
Japan
60.5
Peru
60.0
EU 27
58.0
Chile
57.3
Argentina
57.3
India
56.5
Russia
52.0
China
34.8
0.0
20.0
40.0
60.0
Source: IMF, World Bank, Bloomberg and Santander
80.0
p.7

9. p.8
The Weight of Emerging Markets and LatAm in the World
Weight of EM in Different Parameters (% of World)
Weight of LatAm in Different Parameters (% of World)
7.2%
7.1%
4.7%
3.3%
2.6%
2.1%
GDP-PPP
Sources: IMF, World Bank, Bloomberg and Santander
Population
Market
% in MSCI
Capitalization
ACWI
Listed
Companies
% of Global
Funds AUM
1.8%
Traded
Volume

10. LatAm Market Liquidity
p.9
Latin America market liquidity – country view
Trading Volume
ADTV (3M)
Mk cap
(MM USD)
Local
ADR
Local
ADR
Argentina
74,085
16.1
69
28.0
100.0
Brazil
717,588
2,930.0
1,580
3,003.0
1,776.0
Chile
183,966
123.0
98
149.4
98.6
Colombia
188,990
75.7
33
86.7
24.7
Mexico
351,237
956.0
484
946.5
476.5
Peru
41,900
7.0
140
10.4
121.0
Country
Source: Santander , Bloomberg as of December 6th, 2013
(1) Based on Santander rated universe of 217 LatAm companies

11. Latin America: A Varied Group of Peculiar Emerging Economies
Private Consumption
Gov. Spending
USA
USA
68.6
Mexico
Mexico
64.7
Brazil
Colombia
60.9
Colombia
Japan
60.5
60.0
Peru
16.2
22.2
Japan
Peru
10.2
EU 27
19.2
EU 27 EU 27
Chile
23.5
Argentina
23.9
Argentina
Argentina
EU 27
Chile
57.3
Chile
Argentina
57.3
Argentina
India
56.5
India
19.2
India
Russia
19.0
Russia
China
China
34.8
0.0
20.0
40.0
60.0
Source: IMF, World Bank, Bloomberg and Santander
80.0
21.7
13.1
13.2
0.0 10.0 20.0 30.0
China
Japan
23.1
Peru
4.4
15.2
Chile
6.1
32.9
18.4
Argentina
3.9
India
Russia
China China
26.7
China
4.3
0.0
-10.0 -5.0 0.0
20.0 40.0
5.0
26.8
14.5
20.2
28.0
50.0 100.0
15.9
18.7
EU
1.2 27
16.4
11.0
13.5
RussiaRussia
47.7
0.0
29.2
15.0 -0.9
India India -6.1
14.1
30.4
19.0
Mexico
Colombia
0.7
Chile Chile
58.0
52.0
Peru Peru
25.4
16.5
0.0Brazil
Colombia 14.2
Colombia
Japan Japan
USA
-0.3
28.9
Brazil Brazil 11.0
20.0
EU 27
Russia
Mexico
Mexico
17.0
Colombia
20.4
14.9
-3.1
USA USA 13.4
23.8
Brazil
20.0
Exports Net Exports Imports
15.7
Mexico
11.8
Japan
Peru
USA
18.8
Brazil
63.0
Investments
p.10
10.0 18.0
22.4
10.0 15.0
0.0 20.0
40.0

12. LatAm Economies: Fundamentally Sound …
p.11
Leverage, 2012 (as % GDP)
Unemployment Rate, 2013E
Source: Santander
Fiscal Deficit, 2013E(% GDP)
International Reserves (% Gov. Debt)

13. LatAm, Under-Leveraged in a Deleveraging World
DM: Total Debt Evolution
Source: Santander
p.12
EM vs DM: Low Leverage Ratios

14. 13
p.13
LatAm Low Private Debt Levels Persist Despite Growth
Private Credit (% of GDP)
Mortgages (% of GDP)
85%
UK
180%
Consumer
Mortgages
Corporates
140%
77%
US
64%
Spain
54%
DM Av.
47%
Germany
41%
France
40%
Japan
100%
23%
Italy
20%
Chile
18%
EM Av.
60%
15%
China
10%
Mexico
7%
India
20%
Brazil
Colombia
-20%
Peru
Japan
US
Germany China
Chile
Brazil
Mexico Colombia Peru
Source: IMF, BIS, central banks, governmental entities and Santander estimates
Russia
6%
5%
4%
3%

15. LatAm Economies: … But Some Concerns in the Horizon
p.14
Current Account 2013E (% GDP)
Inflation 2013E (%)
Investments (as % of GDP)
Real Wages vs Productivity
33%
AR
BZ
CH
30%
MX
PE
UR
27%
24%
21%
18%
15%
12%
Source: Santander
CO

16. 15
p.15
The Constantly Growing Middle Class
Population Segmentation
Source: IMF, SEDLAC and Santander estimates
Population Segmentation Evolution

17. 16
Financial Markets, Quick to Embrace but also to Exit
LatAm: Equity Markets
LatAm: Government Bonds
LatAm: Commodities vs Equity Markets
2000
LatAm: FX
600
1800
500
1600
1400
400
1200
1000
300
800
200
600
400
100
200
LatAm Equity/ World
Commodity Index
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bloomberg, FactSet and Santander.
p.16
0

18. p.17
Section 2
Equity Markets & Fund Flows

19. LatAm: Underperforming and Outflows
p.18
Main Global indices performance (in US$)
2011
20.2%
2012
2013YTD
18.3%
16.5%15.1%
5.5%
Latin America main indices performance (in US$)
27.0%
2011
27.0%
10.8% 9.5%
7.3%
2012
2013YTD
11.7%
11.6%
5.4%
-2.0%
-4.2%
-1.2%
-14.7%
-6.1%
-27.1%
-14.0%
-16.8%
-19.1%
Dow Jones
FTSE
EuroStoxx
MSCI Asia
-17.4%
-13.1%
-23.0%
-23.6%
-28.2%
Brazil
-21.9%
-19.6%
-31.8%
Mexican
Colombia
Peru
Chile
MSCI LatAm
Fund Flows as % of AUM by Latam Market(1)
Weekly Fund Flows to LatAm LTM (in US$ MM)
40%
1,500
Fund Flows
4 per. Mov. Avg. (Fund Flows)
24%
30%
1,000
27%
20%
500
10%
0
-500
2013YTD
8%
0%
-10%
11% 9%
8%
6%
2012
-5%
-2%
-2%
-20%
-1,000
-30%
-1,500
-40%
-50%
D-12
F-13
A-13
J-13
Source: Santander, EPFR Global and Bloomberg as of December 16th, 2013
(1) Data as of October 2013
S-12
N-13
Brazil
Chile
Colombia
Mexico
Peru

20. 19
p.19
QE Liquidity Benefited Most GEM Dedicated Funds
GEM Dedicated Funds (US$ millions and % of AUM)
LatAm Funds (US$ millions and % of AUM)
60,000
700,000
600,000
120%
50,000
500,000
100%
40,000
400,000
60%
140%
80%
40%
20%
0%
30,000
300,000
200,000
40%
100,000
20%
-20%
60%
20,000
0
0%
D-08
J-09
D-09
J-10
D-10
AUM (LHS)
J-11
D-11
J-12
Cumulative Flows (RHS)
Source: EPFR Global, MSCI, Bloomberg and Santander
D-12
J-13
-40%
10,000
-60%
0
-80%
D-08
J-09
D-09
J-10
D-10
AUM (LHS)
J-11
D-11
J-12
D-12
Cumulative Flows (RHS)
J-13

21. 20
Fund Flows: The ‘Big Rotation’ Has Started
p.20
US: Flow of Funds: Fixed Income vs Equity
Global: Flow of Funds in Credit
Weight of LatAm in Global and GEM Funds
Cumulative Flows to EM vs. DM, 2013YTD
26
3.5
180,000
25
EM
3
DM
160,000
24
2.5
140,000
2
120,000
1.6%
1.5
100,000
23
22
21
20
80,000
19
1
18.1%
18
0.5
17
16
200,000
60,000
40,000
20,000
J-05 O-05 J-06
A-07 J-08 O-08 J-09
Weight of LatAm in GEM Fund
A-10 J-11 O-11 J-12
A-13
Weight of LatAm in Global Funds
Sources: ICI, Lipper, Fitch, EPFR Global, Bloomberg and Santander estimates..
0
0
J-13
F-13
M-13
A-13
M-13
J-13
J-13
A-13
S-13

22. Fund Flows to Peru – emerging as an alternative to Brazil & Mexico
Fund Flows to Peru: Evolution since 2007 (Base 1)
Weight of accumulated inflows by Country
p.21

23. LatAm Primary Markets: More Active than Last Year
p.22
LatAm ECM activity since 2007(1) (in US$ m)
22 Deals
35 Deals
60 Deals
55 Deals
62 Deals
51 Deals
26,467
31,350
29,876
1,261
15,757
21,313
11,787
8,486
8,248
11,162
12,240
2010
2011
2012
2013YTD
13,062
2008
17,257
17,980
17,065
7,062
548
1,789
7,158
1,057
772
30,045
24,210
24,898
2009
IPO
Follow-On
Convertibles
Petrobras Offering
Total
Latam current pipeline for equity deals
Date
Country
Sector
Issuer
Type
Size
($ MM)
Range / Sub.
Expected Date
Price (Local)
19-Nov-13
Colombia
Finance
Banco de Bogota
FO
514
63,000.00
16-Dec-13
25-Nov-13
Colombia
Finance
Bancolombia
FO
1,414
-
TBD
1-Nov-13
Colombia
Finance
Grupo Aval
FO
1,250
-
TBD
21-Oct-13
Mexico
Real Estate/Property
Fibra Prologis
IPO
-
-
TBD
23-Aug-12
Brazil
Auto/Truck
AutoBrasil Participacoes
IPO
-
-
TBD
23-Jan-13
Paraguay
Oil & Gas
Dahava Petroleos SAECA
IPO
100
-
TBD
17-May-13
Chile
Retail
Farmacias Ahumada
FO
376
-
TBD
20-Aug-13
Brazil
Auto/Truck
Sascar Participacoes
IPO
-
-
TBD
27-Aug-13
Argentina
Computers & Elect
Globant SA
IPO
86
-
TBD
Souce: Dealogic, Santander as of December 16th, 2013
(1) Includes FOs > US$ 100 MM, IPOs > US$ 50 MM

24. p.23
Mexico taking Brazil position in Primary Markets
LatAm - Priced IPOs > $50 MM (2013 YTD)
Date
6-Dec-13
25-Oct-13
24-Oct-13
15-Oct-13
Countr
Sector
y
Professional
Services
Professional
Brazil
Services
Professional
Brazil
Services
Brazil
Mexico Food & Beverage
Aftermarket Performance (%)
Type
Size
($ MM)
Free Float
(%)
Offer Price
(Local)
Range
Rel. to
Midpoint (%)
1 Day
1 Week
1 Month
Since Offer
Rel. to MSCI
Latam
CVC Brasil Operadora
IPO
226.87
26.02
16
18.00 - 22.00
-20
-3.13
-3.13
-
-3.13
-1.95
Grupo Ser Educacional SA
IPO
245.37
25.04
17.5
19.50 - 23.50
-18.6
-1.83
10.29
22.29
25.14
33.53
Gaec Educacao (Anima)
IPO
215.06
31.27
18.5
16.50 - 22.00
-3.9
3.84
7.57
16.76
11.08
18.77
Grupo Industrial Lala SA de
CV
IPO
938.81
18.46
27.5
23.50 - 27.50
7.84
7.6
7.2
6.07
4.36
12.31
-5.54
-5.15
-0.01
17
-0.06
21.33
-5.77
26.69
5.04
Issuer
8-Oct-13
Mexico Real Estate/Property Fibra Danhos
IPO
396.02
21
26
26.00 - 28.00
-3.7
17-Sep-13
23-Jul-13
Mexico Transportation
Volaris SA
Mexico Real Estate/Property Fibra Shop
IPO
IPO
398
378.97
33
76.78
12
17.5
12.00 - 14.00
17.50 - 19.50
-7.69
-5.41
-1.423076923 3.76923076
9
16.75
21.08
-0.74
-0.29
17-Jul-13
Brazil Utility & Energy
CPFL Energias Renovaveis
SA
IPO
403.94
16.34
12.51
12.51 - 15.01
-9.08
-3.916866507
-7.99
-0.08
3.84
-15.67
13-Jun-13
Mexico Dining & Lodging
Hoteles City Express SAB
de CV
IPO
208.2507
40
24
24.00 - 29.00
-9.43
-6.38
-8.46
-4.38
-10.5
-6.12
29-Apr-13
Brazil Auto/Truck
Iochpe-Maxion
CONV
159.2
-
-
-
-
-
-
-
-
45.29
25-Apr-13
Brazil Insurance
BB Seguridade
Participacoes SA
IPO
5046.63
30
17
15.00 - 18.00
3.03
-2.35
4.41
7.94
42
38.94
25-Apr-13
Brazil Transportation
Smiles SA
IPO
497.92
39.85
21.7
20.70 - 25.80
-6.67
5.99
9.91
16.82
47.88
-9.73
22-Apr-13
Brazil Utility & Energy
Alupar Investimento SA
IPO
368.48
19.62
18.5
18.50 - 21.50
-7.5
-5.41
-2.22
1.03
-15.41
-33.13
15-Apr-13
Brazil Chemicals
26-Mar-13
Mexico Construction/Building
26-Mar-13
Mexico Utility & Energy
Biosev SA
OHL SA (OHL Mexico
Underlying)
Ienova (Sempra)
21-Mar-13
Mexico Real Estate/Property Fibra Terra
IPO
355.49
22.56
15 I 0.25
0
-14.3333
-12.67
-6.67
-35.8
-21.33
CONV
388.98
-
-
-
-
-
-
-
-
51.21
IPO
519.6
16.85
34
30.00 - 34.00
6.25
16.53
15.71
27.41
61.38
-10.46
IPO
663.4
77.61
28
28.00 - 32.00
-6.7
-2.21
-1.14
2.11
-16.21
-13.62
18.5
17.25 - 19.75
-
2.76
1.57
10.92
-9.41
-3.57
28
27.00 - 32.00
-5.08
1.64
-0.21
0
-1.11
49.07
27
23.00 - 27.00
8
18.52
15
17.07
84.19
-4.92
(4.6)
(5.4)
1.8
(1.1)
2.9
0.7
7.6
6.1
11.0
1.4
8.0
(1.0)
19-Mar-13
Mexico Real Estate/Property FIBRA INN
IPO
316
12-Mar-13
Mexico Retail
Computers &
Brazil
Electronics
IPO
831
92.5687536
6
16
230
37.89
7-Feb-13
Grupo Sanborns
Linx
IPO
Total
$
12,788
Average
Median
$
$
639
384
15 | 0.01 - 2.00
Source: Bloomberg and Dealogic. Includes IPOs > 50 MM as of December 16th, 2013
36
28

25. Peru’s Graña y Montero Follow On
p.24
LatAm - Priced Follow-On Offerings > $100 MM (2013YTD)(1)
Date
Country Sector
Issuer
Type
Size
($ MM)
% of Co. Sold
Last Close
FO
FO
FO
FO
1066.58
62.88
670.29
408.52
25
10.06
23.66
21.76
25.60 - 33.60
14.6
1329.9
16.6
From Anncmt to
Offer
(%)
-22.3
-4.19
-13.39
-18.92
FO
356.72
7.43
6702.6
-
FO
281.88
22.53
74
-17.57
FO
FO
208.68
329.64
18.53
43.64
18.59
0.05
-29.94
-
FO
292.83
6.62
26.68
-5.93
FO
FO
FO
FO
FO
113
412.77
2177.82
185.16
824.31
9.47
14.89
14.33
15
6.35
194
22.24
72.21
41.68
26.32
-1.72
-12.32
-8.74
-11.5
Retail
Finance
Finance
Transportation
Aftermarket Performance (%)
1 Day
1 Week
1 Month
Since Off.
1.43
-6.67
-1.67
-4.2
1.43
-4.33
Rel. to MSCI
Latam
1.24
1.52
-
-
-
-
-
0
0
-0.41
-4.54
4.25
2.86
-
5.09
-
6.29
-
17.77
-
26.56
-
1.54
3.46
5
-8.96
-4.92
0
11.51
0.78
3.46
-0.99
15.55
2.43
15.31
-5.3
17.08
21.43
16.96
-7.24
32.07
11.7
31.54
-5.10
32.07
7.92
27.24
12-Dec-13
12-Dec-13
22-Nov-13
6-Nov-13
Brazil
Mexico
Chile
Colombia
16-Oct-13
Chile
16-Oct-13
Mexico
16-Oct-13
24-Sep-13
Brazil
Chile
13-Sep-13
Chile
26-Jul-13
24-Jul-13
16-Jul-13
9-Jul-13
25-Jun-13
Chile
Peru
Mexico
Mexico
Mexico
Via Varejo SA
Corporacion Actinver
Quinenco SA
Avianca Holdings SA
Comp. Cervecerias Unidas Food & Beverage
CCU (2)
Grupo Financiero
Finance
Interacciones
Metal & Steel
Tupy SA
Transportation
CSAV (2)
Comp. Cervecerias Unidas Food & Beverage
CCU
Finance
Grupo Security (2)
Construction/Building Grana y Montero SAA
Finance
GF Banorte
Transportation
OMA
Finance
GF Inbursa SAB de CV
25-Jun-13
Mexico
Real Estate/Property Vesta
FO
186.63
22.57
23.67
-13.63
10.44
11.33
18
3.96
-0.34
20-Jun-13
Mexico
Construction/Building OHL Mexico SAB de CV
FO
470.99
12.32
29.82
-15.25
-1.34
5.1
21.69
15.45
11.53
12-Jun-13
Chile
Forestry & Paper
FO
184.45
6.26
1695.4
-
-
-
-
-
-
5-Jun-13
Brazil
Real Estate/Property Iguatemi SA
FO
176.7
7.41
24.02
-2.08
2.13
0.43
-5.23
-2.72
4.88
30-May-13
Mexico
Real Estate/Property FibraHotel
FO
335.26
36.62
26.5
-3.52
5.61
7.98
2.08
-19.56
-8.81
9-May-13
Colombia Construction/Building Cementos Argos SA
FO
764.73
13.65
22.91
-9.29
5.974
4.52
3
9.46
25.99
24-Apr-13
Brazil
FO
252.05
4.92
45.88
-8.07
-1.13
-4.44
0
-26.89
-12.02
18-Apr-13
Brazil
FO
165.01
30.61
18.21
-17.18
-4.74
-2.86
1.37
-18.29
-4.88
28-Mar-13
27-Mar-13
Chile
Brazil
Professional Services Abril Educacao SA
BHG SA Brazil Hospitality
Real Estate/Property
Group
Utility & Energy
Enersis (2)
Real Estate/Property Multiplan
FO
FO
2375
259.7
16
4.78
182.41
58.4
6.03
0
-2.79
-2.52
-16.22
0.52
15-Mar-13
21-Feb-13
30-Jan-13
30-Jan-13
29-Jan-13
Chile
Chile
Mexico
Argentina
Mexico
Retail
Finance
Consumer Products
Agribusiness
Real Estate/Property
FO
FO
FO
FO
FO
1634
464
269
111
1732
11.83
3.75
14
12
38
2930.5
69.82
39.5
8.18
38.32
-6.67
-11.11
4.52
0
6.25
8.49
0
6.25
8.14
0
0
8.19
-24.83
-3.25
12.76
-5.54
16.04
32.95
23-Jan-13
16-Jan-13
26-Dec-12
Brazil
Professional Services Estacio Participacoes
Chile
Finance
Corpbanca (2)
Colombia Construction/Building Constructora Conconcreto
FO
FO
FO
326
159
137
17
4
39
42.75
21.11
1340
7.28
4.65
1.9
0
5.07
-0.74
14.55
0.74
47.57
-0.74
67.51
15.93
16.7
14.2
(5.1)
(4.0)
(8.8)
(9.0)
2.2
1.5
3.7
3.5
5.7
2.1
2.1
(1.7)
10.7
4.6
Empresas CMPC SA (2)
Cencosud (2)
Banco de Chile (2)
Organizacion Cultiba
Adecoagro
Fibra Uno
Total
Average
Median
Source: Bloomberg and Dealogic. Includes FOs > 100 MM as of December 16th, 2013
(1) Excludes Block Trades
(2) Denotes Chilean Rights Offerings
$
$
$
17,394
544
309

26. p.25
Section 3
2014 Perspectives

27. p.26
LatAm GDP Growth: Brazil Bucks the Trend
LatAm GDP Growth (YoY, %)
7.0
6.3
6.0
5.7
5.6
5.3
5.0
4.5
4.2
3.9
4.0
4.5
4.2
4.0
3.7
4.0
3.8
3.0
3.0
3.0
2.3
2.0
1.9
1.7
1.6
1.5
1.2
1.0
0.9
0.5
0.0
Argentina
Brazil
2012
Source: Santander
Chile
2013E
Colombia
2014E
Mexico
2015E
Peru
5.5

28. 27
LatAm Fairly Valued vs. Other Global Markets
p.27
12-Month-Forward P/E vs. EPS CAGR 13-15E
18
Nikkei 225
16
12M Forward P/E
S&P 500
14
MSCI LatAm
STOXX 600
12
MSCI EM Asia
10
8
MSCI EM Europe
6
4
7%
9%
11%
13%
15%
EPS CAGR 13-15E
Source: Companies, FactSet and Santander
17%
19%

29. p.28
Highlights: Upgrading Peru to Overweight
Recent upgrade of Peru to Overweight by Santander
LatAm Sector recommendations

30. Highlights: Upgrading Peru to Overweight
1. Peru to continue growing at the fastest pace in LatAm in 2014 (5.6%) and is the best vehicle to play the rebound in
global growth:
i.
ii.
iii.
iv.
Investments should continue to drive growth in the country, with 10.0% growth rates driven by mining and infrastructure sectors;
Exports should rebound strongly from -2.6% in 2013 to 5.0% in 2014, given the stabilization in commodity prices and improving
global growth;
We continue to see the inflation scenario remaining benign, at 2.5-3.0%;
Although the country’s current account deficit remains elevated (4.9% of GDP) in current liquidity conditions, we believe this is
manageable due to Peru’s high international reserves (30.6% of GDP), long maturity of external debt (12 years), and
increased mining production that will place downward pressure in the upcoming years.
2. Concerns about the mining sector’s effect on GDP growth are overdone, as we see:
i.
ii.
iii.
the stabilization in metal prices;
export revenue growth will increasingly come from volume increases vs. price increases (the country intends to double copper
output by 2016); and
Peru remains one of the most cost-efficient global metal producers (92.7 cents/lb for copper)
3.
Peru’s equity market currently trades at an excessive equity yield gap compared with the rest of LatAm, which more than
prices in the risk of a growth slowdown in China and lower commodity prices. Current valuations (12-month-forward P/E of
13.3x and equity yield gap of 3.2%) have been driven by risk aversion (QE tapering liquidity implication for EM and fears of
end of commodity super-cycle) vs. underlying fundamentals of the country’s equities. Companies in Peru have responded
aggressively to the lower global growth conditions by cutting costs to sustain profitability and growth moving forward. The most
notable examples have been Credicorp and Buenaventura.
4.
Earnings expectation in the last 12 months have been revised downward quite significantly (by 34% vs. 17% for
LatAm), which could leave some room for surprises in upcoming quarters, with more stability in commodity prices and FX. We
currently expect a fall of 12% in earnings for 2013, with a rebound to 13% in 2014.
p.29

31. p.30
Peru: An Exports and Investments Story
Peru: Infrastructure Projects
Peru Copper Production, 2011-16E
Railroads
2,474
1,814
1,519
1,235
1,299
Number of
Projects
1
Expected
Awarding
4Q13
Power and Gas
2,204
5
4Q13
4.1
Sector
Est. Amm.
6.5
Current
Antamina
2013
Cerro Verde
Antapaccay
2014
Toromocho
Sources: Proinversion, SNM, Bloomberg and Santander estimates
2015
Constancia
2016
Las Bambas
2Q14
0.9
1
4Q13
0.6
1
4Q13
0.6
Water and Sewerage
2012
3
Ariports
2011
Roads
Agricultural
3
4Q13
0.5
Telecomm.
1
4Q13
0.3
Others
10
4Q14
3.5
Total
25
US$ 17 bn

32. Appetite for Peruvian assets
p.31
Commentary & Considerations
 Foreign Perception:
- Peru is still the shining star of Latin America,
- Highest growth rate among major economies in the region
- Sound macro environment and room for maneuver: the government is doing the right things
 Companies are quickly adapting to the new environment
- Capital “became” a scarce resource
- Focus changed from expansion to efficiency
- Growth opportunities still exist, but companies are becoming more selective in what they pursuit
Peru
Investors
Trip 2013
 Investment becomes even more important:
- Peru has sustained the highest rates of investment/GDP in Latin America
- Expected shift from private to public investment
- Mining investment should sustain growth despite lower commodity prices
- Peru is an efficient copper and gold producer, therefore major projects should be still profitable at current prices.
- Infrastructure will be key to sustain growth in the short term and increase productivity over the medium/long term
 Concerns:
− Further deceleration in China and/or further decreases in commodity prices
- Delays in infrastructure projects
- Price of land in certain areas of Lima
- Too much efficiency can strangle growth
- Decreases in business and consumer confidence
Press
and
other
feedback
from
investors
“Appetite to gain exposure to the strong internal demand growth expected in
Peru. Positive macro environment , with the fastest GDP growth for 2013”
“Capital Inflows will continue to be strong during 2013 given attractive
investment opportunities and strong macro fundamentals (high growth,
controlled inflation, fiscal surplus)”
“Positive views on the outlook for commodities prices, specially copper,
although volatility is always a risk factor”
Source: Santander Equity Research based on feedback during recent Andean Trip
Wall street research analyst views and discussions with several buy-side accounts.
Positive about Peru and
its macro-economics
outlook
Particular interest in
stories related to
construction and
consumption to benefit
from dynamics in the
country
Offering size and
liquidity is key to
investors
“Peru, in my opinion, is by far the most interesting country nowadays. […] The
challenge here is find liquid enough investable ideas”
“In the past five years Peru has grown 7.2% on average, significantly better
than the average for Latin America, which was 4.1% in the same period”
“Peru is shifting to a consumption driven growth as authorities boost social
spending . He challenge is thus whether the current economic model will be
sustained in the medium term”
“We find Peru very attractive at the country level and Consumer Discretionary
at the sector level”

33. Global Economic Forecast
Source: Santander estimates
p.32

34. LatAm Economic Forecast
Source: Santander estimates
p.33

35. p.34
Appendix

36. LatAm Economic Forecast
Source: Santander estimates
p.35

37. LatAm Economic Forecast
Source: Santander estimates
p.36

38. LatAm Economic Forecast
Source: Santander estimates
p.37

39. LatAm Economic Forecast
Source: Santander estimates
p.38

40. 39
p.39
Effect of Liquidity Injections on LatAm
Relative Performance of LatAm vs. Global Equities
QE1
LTRO1
QE2
Twist
140
OMT
Tapering Talks
LTRO2
ABE
QE3
130
120
110
100
90
80
70
60
J-08
M-08 S-08
J-09 M-09 S-09
Source: EPFR Global, MSCI, Bloomberg and Santander
J-10 M-10 S-10
J-11 M-11 S-11
J-12
M-12 S-12
J-13 M-13 S-13

41. Earnings Estimates Remain Too High…
p.40
Earnings Growth Expectations, 2013E and 2014E
29%
26%
26%
21%
19%
17% 16%
18%
12%
11%
5%
-3%
-3%
-21%
LatAm
Chile
Brazil
Argentina
2013
Mexico
2014
Colombia
Peru

42. …Downward Revisions to Continue; Mostly for Brazil
p.41
2013 Earnings Revisions in Last 3M, 6M and 12M
-7%
LatAm
-11%
-17%
-19%
Argentina
-27%
-27%
-13%
Peru
-30%
-34%
-8%
Brazil
-11%
-16%
-7%
-6%
Chile
-14%
-5%
Mexico
-11%
-17%
-3%
Colombia
-11%
-12%
3M
Source: Companies, FactSet and Santander
6M
12M

43. 42
Asset Classes: Fixed Income
p.42
Normalized Policy Rates (last / 6-year average)
2.0
Brazil
Chile
Colombia
Mexico
Peru
tight
policy
1.5
1.0
(%)
0.5
EM Local Rates Spreads
Mov e (UST v olatility ) index
5Y EM - 5Y UST (%, RHS)*
Fed's balance sheet (US$ tn, RHS)
300
250
6.5
5.5
150
-0.5
100
-1.0
-1.5
loose
policy
-2.0
Jan-07
4.5
3.5
2.5
50
1.5
0
Jul-08
Jan-10
Jul-11
Jan-13
0.5
Jun-06
Dec-07
Source: Santander.
5Y CDS
(bps)
186.7
79.7
65.5
121.0
270.7
211.8
92.7
133.2
106.7
79.9
162.5
198.2
56.3
123.0
196.3
29.1
132.07
Core CPI
(y/y%)
5.81
1.60
1.60
2.28
3.50
4.80
2.56
3.32
2.80
1.40
4.50
10.20
1.80
0.85
7.22
1.11
3.46
5Y rate-CDSCore CPI (%)
4.73
2.46
2.23
0.96
(1.38)
1.12
1.61
(1.84)
(0.87)
1.48
1.08
(5.01)
1.02
1.48
(0.09)
0.14
0.57
Dec-10
Jun-12
Dec-13
B r a zil
C h ile
C o lo m b ia
M e xic o
Peru
5
10Y rates - 12m CPI - 10Y
CDS
Brazil
Chile
China
Colombia
Hungary
Indonesia
Mexico
Peru
Phillipines
Poland
Russia
S. Africa
S.Korea
Thailand
Turkey*
U.S.
Average
5Y Rate
(%)
12.40
4.86
4.48
4.45
4.82
8.03
5.10
2.81
3.00
3.68
7.20
7.17
3.38
3.56
9.09
1.53
5.35
Jun-09
Linkers vs. Nominal
Adjusted LatAm Rates
Country
8.5
7.5
200
0.0
9.5
4
3
2
y = 2.77x - 4.11
R2 = 0.83
1
0
-1
-
1.0
2.0
10Y CDS + TIPS
3.0
4.0

44. p.43
Appendix 2
Peru
p.43

45. Peru: A “5.5% Growth” Story
p.44
Peru GDP Growth, 2004-14E
9.8%
8.9%
12
8.8%
10.0
7.7%
10
7.0%
6.8%
9.5
8.8
8.6
6.3%
5.4%
5.6%
8
6.9
6.2
5.0%
6.6
6.9
6.1
6.4
6.7
6.3
5.6
6
5.4
II
5.6
IV(E)
4.5
4
2
0.9%
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014E
I
II
III
2010
Sources: Bloomberg and Santander estimates.
IV
I
II
III
2011
IV
I
II
III
2012
IV
I
2013
2014
(E)

46. Peru: Credit Dollarization Remains High
Consumer Credit Dollarization (% of Total)
p.45
Consumer Credit Composition (% of Total)
59%
54%
50%
49%
Other
Consumer
31%
11%
2009
10%
2010
Consumer
9%
2011
Mortgages
9%
2012
Sources: CNC, Banco Central do Brasil, governmental entities and Santander estimates.
Mortgages
46%
Credit
Cards
23%

47. p.46
Peru: Earnings Expectations Reflect Bearish Sentiment
2013 Earnings Revisions, Last 12 Months
-14%
-17%
-16%
Mexico
Brazil
-12%
-17%
-27%
-34%
Peru
Sources: Bloomberg and Santander estimates.
Argentina
Chile
Colombia
LatAm

48. p.47
Peru: Cheapest Valuations in LatAm
Peru 12 Month Forward P/E
Last: 13.35 High: 23.25
Avg: 14.51 Low: 4.33
24
21
18
15
12
9
6
3
'05
Sources: Bloomberg and Santander estimates.
'06
'07
'08
'09
'10
'11
'12
'13

49. p.48