election tracker - BNP Paribas GlobalMarkets

COLOMBIA ELECTION TRACKER

JUNE 2018 EMERGING MARKETS RESEARCH, LATAM MARCELO CARVALHO @MCarvalhoEcon

BREAKING NEWS: COUNTDOWN TO THE FINAL OUTCOME 2ND ROUND POLLS suggest a comfortable lead for Duque

MARKET-FRIENDLY IVÁN DUQUE REMAINS THE FAVOURITE

DISCLAIMER Polls got it right in this year’s Congress and first round elections; but track record for second-round is worse Bogotá and the Caribbean could end up favouring Gustavo Petro, but would it be enough for a turnaround? See here.

The math adds up in his favour Political heavyweights have joined his campaign He is predicted to win in key battlegrounds Opponent Gustavo Petro holds a much higher rejection rate

What if the majority of Fajardo’s voters go to Petro? Would he stand a chance? See here. Sources: Semana, ElNuevoSiglo, LaSillaVacia, BNP Paribas

Compare candidates

Our cheat sheet on policy proposals

…on taxation proposals

What we know already

March 2018: The new Congress

April 2018: Economic policy proposals

…on trade proposals

…on proposals for oil & mining

…on pensions proposals

…on their fiscal impact

May 2018: First round outcome June 12, 2018 |

2

2018 ELECTIONS: 2ND ROUND SCENARIOS Duque vs. Petro: a tighter than anticipated race?

IN A SECOND ROUND, WHO WOULD YOU VOTE FOR? (June 2018: surveys)

Iván Duque 53

36

Gustavo Petro 50

38

45

36

52

Petro: a potential surprise?

TRACK RECORD OF POLLSTERS

(difference of error of the gap between the two leading candidates, in the 2018 first round, by institute1)

Distance: Petro from Duque 57 34

37

46

40

YanHass Guarumo

55

Invamer CNC

35

Datexco CyC -10

-17

-12

-9

-18

-20

-6

-20

-8

-6

-4

-2

0

In the first round, Guarumo and Invamer showed the lowest margin of error, while Datexco, the widest margin

Polls released after the first round

Source: Pollsters, BNP Paribas

June 12, 2018 |

3

1ST ROUND RESULTS: ANALYSIS Distance, in average, between the results and the last polls conducted before the first round: Petro

Fajardo

2pts lost

8pts

gained

Vargas Lleras lost 4pt

Duque won 3pts

EXCEPT FOR FAJARDO, THERE WAS LITTLE SURPRISE FROM POLLS IN THE FIRST ROUND

Duque won in 23 out of 33 regions Petro won in 9 regions, securing the coast Centre-left Sergio Fajardo gained Bogotá, and almost beat Petro Vargas Lleras performance disappointed, despite support of local machineries

Click here for our full analysis on the first round results

First round: outcome, in thousands of voters

7570 Duque missed the 50% mark by 2 million votes

Duque Petro

4851

Fajardo

4590

Vargas Lleras

See here what it took for the Greens to support Petro Fajardo said he will vote blank, but his coalition joined Petro’s campaign Vargas’s whole coalition announced support for Duque De la Calle said he will vote blank, but his party joined Duque’s campaign

1408

De la Calle

399 0

9409

Sources: Semana, ElNuevoSiglo, LaSillaVacia, BNP Paribas

18818

Turnout: 53% (up 13pp from 2014)

June 12, 2018 |

4

2ND ROUND: KEY BATTLEGROUNDS Profile of regions likely to influence destination of votes from those left behind 1st round outcome

Bogotá Cundinamarca

1.0

1.1

1.2

0.2

0.3

(Bogotá metro)

Antioquia

The 1.2 million votes Fajardo gathered in

0.2 0.5

0.2

Valle del Cauca Atlantic the

1.3

0.1

0.5

0.7

Sources: Registraduría, ElNuevoSiglo, LaSillaVacia, BNP Paribas

votes between Duque and Petro

0.1

0.5

0.2

0.5

Petro was a highly controversial mayor in Bogotá, breaking contracts with concessioners and putting the city in the brink of bankruptcy; yet, the city has traditionally favoured left-of-centre candidacies and shows resistance to Uribe’s movement More conservative than the capital, its surroundings are likely to

voters, and showed unexpectedly strong

favour Duque; he also could get a boost from popularity of his vice-

support for Fajardo in the first round

presidential formula, Marta Lucia

Uribe, which retains high popularity in the region

Antioquia strongly rejects Petro, which mean that it is unlikely that most of Fajardo’s voters flock to the left; Duque already polls very strong here

Valle includes Cali, the only among largest

Cali recently has leaned to left, favouring alternative candidacies

cities where Petro won; votes split almost

such as Petro, yet he was not able to win in the first round and

equally between the three top hopefuls

seems unlikely to do so in the second

This region was the main source of votes

1.4

Likely winner?

Cundinamarca holds more than 1 million

home state to former president Álvaro

0.1

Caribbean

Bogotá is close to half the difference in

Antioquia, which includes Medellín, is the

1.4

0.5

Why it matters?

for Petro in the first round, and considered key in his campaign to reaching first place, along with Bogotá and the Pacific

Local machineries, after supporting Vargas Lleras in the first round, have all announced support for Duque, inclining the balance to his favour; yet, outcome is hard to predict given low efficiency of machineries in the first round and turnout, likely to be lower

Click here for voting intentions by region June 12, 2018 |

5

2ND ROUND: THE MATH BEHIND CHANCES OF VICTORY

What it takes to win?

Polls suggest most of Fajardo’s voters will back Petro… …but he will still be far from winning Duque

Voting intentions in the 2nd round, according to party preferences (May 2018)

48

Duque

-1.3

Petro's decency list supporters Duque's party supporters Independent De la Calle's coalition supporters Vargas Lleras's coalition supporters Fajardo's coalition supporters

35 Petro

Implied vote transference: Votes, 1st round

Going to Petro

Going to Duque

Fajardo

24%

V. Lleras

7%

De la Calle

2%

72% 31% 33%

18% 45% 61%

Sources: Registraduría, Invamer, LaSillaVacia, BNP Paribas

Petro

-2.2

-4.0

If turnout remains above 50% in the 2nd round: Petro would need 5 million additional votes, while Duque slightly more than 2 million If turnout is similar to 2014 levels: Petro would still need 2 million more votes than Duque needs to win the majority

The math behind it

-5.0

MORE REALISTIC SCENARIO:

Petro gets 50% of 1st round centre-left* and 20% centre-right* voters, Duque gets 20% and 70%, respectively (in million of votes):

LESS LIKELY SCENARIO:

Petro gets 70% of 1st round centre-left* and 30% centre-right* voters, Duque gets 10% and 60%, respectively (in million of votes):

Petro Petro 4.9 3.8 4.9 2.8 Duque Duque 7.6 2.0 7.6 2.6 Iván Duque wins, in both simulations Centre-left voters: those who cast their ballot for either Sergio Fajardo or Humberto de la Calle; Centre right voters: those who chose Germán Vargas Lleras in the first round 10% remaining : blank voters, as simulated by polls

June 12, 2018 |

6

CONTENTS

1

POLLS • KEY BATTLEGROUNDS

• VOTING INTENTIONS

NEW CONTENT

This is an interactive menu. UPDATED CONTENT Click on the boxes to navigate through the file

2

GENERAL INFO

HISTORICAL SERIES • PRESIDENT APPROVAL

• POLITICAL SPECTRUM • TRADE

• GUSTAVO PETRO

• CURRENT CONGRESS

• LEFT OR RIGHT?

• SOCIAL SECURITY \

- PETRO’S 12 COMMANDMENTS

• PAST ELEC. POLLS

• WEB POPULARITY

• OIL & MINING

- PETRO’S ODDS: HIGHER WE

• HISTORICAL TURNOUT

• FISCAL IMPACT OF

• TAXES

THINK?

• ABSTENTION

• 2ND ROUND POLLS • OUR TEAM

BIOS & PARTIES

4

• IVÁN DUQUE

• CALENDAR

POLICIES

• OUR RECENT WORK

3

WHO WILL BE THE NEXT MINISTER OF FINANCE?

• POLICY PROPOSALS

• GOOGLE TRENDS

To return to this menu, click+ CONGRESS on the PRIMARIES • NEW CONGRESS menu icon; to navigate through VOTE: OUTCOME STUDY slides, click on the arrows

• REGIONAL ASPECTS CONGRESS VS PRESIDENTIAL OUTCOMES

BREAKING NEWS

June 12, 2018 |

7

CONTENTS

1



NEW CONTENT

GENERAL INFO

BIOS & PARTIES



• GUSTAVO PETRO


• LEFT OR RIGHT?

• SOCIAL SECURITY



• WEB POPULARITY

• OIL & MINING




• TAXES

THINK?

• ABSTENTION


4

• IVÁN DUQUE

• CALENDAR

POLICIES

• OUR RECENT WORK

3

2

UPDATED CONTENT


• NEW CONGRESS WHO WILL BE THE NEXT MINISTER OF FINANCE?

• REGIONAL ASPECTS

• GOOGLE TRENDS PRIMARIES + CONGRESS VOTE: OUTCOME STUDY

CONGRESS VS PRESIDENTIAL OUTCOMES

BREAKING NEWS June 12, 2018 |

8

CONTENTS

1



• 2ND ROUND POLLS

NEW CONTENT

2

3

GENERAL INFO

BIOS & PARTIES

• CALENDAR

• IVAN DUQUE

4

UPDATED CONTENT

HISTORICAL SERIES • URIBE-PASTRANA COALITION • PRESIDENT APPROVAL

POTENTIAL ELECTORATE REJECTION • POLITICAL SPECTRUM • GUSTAVO PETRO

INTERNET USE • OVERVIEW

BY PARTY POPULARITY SOURCE OF NEWS • SERGIO FAJARDO • PLATFORM • LEFT BY ORPOPULATION RIGHT? GROUP

• CURRENT CONGRESS RELIGION AND AGE •EDUCATION, PAST ELEC. POLLS

PARTY IDENTIFICATION IDEOLOGICAL PREFERENCE DEMOGRAPHICS • RULING PARTY, “U” • WEBBYPOPULARITY • VARGAS LLERAS 2ND CHOICE BLANK VOTERS PUBLIC PERCEPTION • CONSERVATIVE • SOURCES OF NEWS

GEOGRAPHICAL LOCATION • HISTORICAL TURNOUT

• GOOGLE TRENDS


• HUMBERTO DE LA CALLE

WHATCONGRESS COLOMBIANS WORRY ABOUT PREDICTION MARKET • NEW • POLICY PROPOSALS

…WITH FISCAL IMPACT …OIL & MINING SECTOR

…by their proposals on taxation

• REGIONAL VOTING BYASPECTS REGION

CONGRESS PREFERENCES THE MOSTVS PRIMARIES + CONGRESSISSUES THAT MATTER PRESIDENTIAL VOTE: OUTCOME STUDY OUTCOMES

BREAKING NEWS June 12, 2018 |

9

VOTER PREFERENCES | POTENTIAL ELECTORATE  Polls show that the public perception of Iván Duque is widely positive  This is in stark contrast to Gustavo Petro’s image, who has an overwhelmingly negative image

Balance of opinion

WHAT’S YOUR VIEW ABOUT…? (Jun 2018) Iván Duque (centre-right)

57

Gustavo Petro (left-wing)

Positive

(positive-negative)

31

38 0%

Negative

Marta Lucia Ramirez (Duque's vicepresidential offer)

50%

56

Angela Robledo (Petro's vicepresidential offer)

31 0%

22

28 50%

38

-13

11

Unsure

57

+26

12

51

Favourable image, over time (%) Jan-18 Mar-18 Apr-18 May-18 Jun-18

100%

Unfavourable image, over time (%) Iván Duque

+34

22

Gustavo Petro

51

Mar-18

+3

41 100%

Jan-18 Apr-18

31

May-18 Jun-18

Iván Duque

Gustavo Petro

Source: Cifras y Conceptos, BNP Paribas

June 12, 2018 | 10

2018 ELECTIONS: 2ND ROUND SCENARIOS IVÁN DUQUE LEADS IN ALL 2ND ROUND SIMULATIONS Gustavo Petro (left-wing)

Ivan Duque (centre-right)

60 57

57

56 54

49

41

50

43 41 36

Sep-17

Source: Invamer, BNP Paribas

43

Dec-17

Jan-18

37

37

Mar-18

Apr-18

May-18

Jun-18

2016 referendum: the vote all pollsters got wrong June 12, 2018 | 11

VOTER PREFERENCES | BY POPULATION GROUP  

Leftist Gustavo Petro is particularly popular among the youth and the urban, upper-middle income electorate, polls say Iván Duque is strong across the board in voter intentions, especially among higher income and middle-aged groups

BY LOCALITY

BY AGE

67 55 40

18-24

43

67

25-34

29

29

33

35-44

45-54

55+

Gustavo Petro (left-wing) Source: Invamer, BNP Paribas

BY GENDER

59

55

73

62

52

BY INCOME GROUP

53 41 25 Urban

Rural

35

55 40

44 48

Lower Middle High income income income

42

60 33

Men

Women


CLICK HERE TO CHECK COLOMBIA’S DEMOGRAPHICS June 12, 2018 | 12

VOTER PREFERENCES | BY PARTY IDENTIFICATION VOTING INTENTIONS BY PARTY IDENTIFICATION (%) Blank vote Gustavo Petro (left-wing)


Independent Centro Democrático Cambio Radical (Vargas Lleras) Conservative (centre-right)

Iván Duque is strong among voters of all parties within Vargas Lleras’s coalition

Gustavo Petro attracts a sizable share of voters from the Green and Polo parties, and independents, suggesting he should win the majority of Fajardo’s supporters

48

La U (centre) Liberal (centre)

Petro's decency list supporters

35

Duque's party supporters Independent De la Calle's coalition supporters

Greens (centre-left) Polo (left-wing) 0

20

40

60

80

100

Duque

Petro

Vargas Lleras's coalition supporters Fajardo's coalition supporters

Source: Invamer,, El Nuevo Siglo, BNP Paribas

June 12, 2018 | 13

VOTER PREFERENCES | 2ND CHOICE  With second-choice potential similar to that prior to the first round, vote transference to Duque should be enough to secure his victory

IF YOUR CANDIDATE DOESN’T MAKE IT TO THE 2ND ROUND, WHO WOULD YOU CHOOSE? (May 2018, % of total response) 21

8

14 10

8

Gustavo Petro Sergio Fajardo Humberto de la Vargas Lleras Iván Duque (left-wing) (centre-left) Calle (centre) (centre-right) (centre-right)

1: Based on the percentage of undecided and the amount of voters said to potentially change their vote before the first round

Source: Datexco, Cifras y Conceptos, BNP Paribas

June 12, 2018 | 14

VOTER PREFERENCES | REJECTION RATES  Gustavo Petro’s rejection rate tops the main candidates, but some surveys suggest it has reduced somewhat  Iván Duque faces resistance from some centrist voters to Uribe’s political movement

WHO WOULD YOU NEVER VOTE FOR? (% of total surveyed)

YanHass 26 28

34

42

Cifras y Conceptos 45 46

2 3 3 Iván Duque

9 9 9

Public perception, over time (% of those surveyed)

Datexco Gustavo Petro

5 6 4

Iván Duque

70 60 50 40 30 20

70 60 50 40 30 20

Negative

Positive 49 40

Sep-17

Jan-18

May-18

60

Negative Positive

29 Sep-17

Jan-18

May-18

Gustavo Sergio Germán Humberto Petro Fajardo Vargas De la Calle Lleras

Source: Polimétrica, Invamer, BNP Paribas

June 12, 2018 | 15

POLLS | LIKELIHOOD OF WINNING WHO DO YOU THINK IS MORE LIKELY TO WIN THE ELECTIONS? (% of voters)

68

70

50

Jan-18

Feb-18

Jun-18

Apr-18 30

10

-10

26 6

Does not know

Source: Ipsos, Datexco, BNP Paribas

Gustavo Petro (left-wing)

Iván Duque (centre-right)

When election day nears, the likelihood of winning could matter to some undecided voters

CLICK HERE TO CHECK EACH CANDIDATE’S POPULARITY ON SOCIAL MEDIA June 12, 2018 | 16

CONGRESS | SIMULATED BASE OF SUPPORT  The 11 March Congress election resulted in a fragmented legislature, but leaning to the centre-right  The balance of forces suggest reduced risks from any rift, but points to difficulties in getting needed reforms approved  Left-of-centre parties remain weak, minority forces, with less than 20% of the seats

UPPER HOUSE COMPOSITION (by ideology)

Left of centre (14%)

Centre (36%)

LOWER HOUSE COMPOSITION (by coalition of support)

Right-of-centre(50%)

Upper House: vote, as % of total valid ballots cast 60%

50% 49%

45% 41%

40% 20% 0%

2014 2018 5% 10%

Total right-of-centre

Total centrists

Total left-of-centre

Source: Registraduria, Semana, BNP Paribas

17

CONGRESS | SIMULATED BASE OF SUPPORT  

Even when accounting for the support of parties in Sergio Fajardo’s coalition, the base of support of a Petro government would be around 25%, limiting the potential for any radical change Three of the main parties have joined Duque’s coalition in the second round, giving him a solid majority

PETRO’S SIMULATED BASE OF SUPPORT

DUQUE’S SIMULATED BASE OF SUPPORT

Senate

Petro's base of support (~25%)

Duque's base of support (~70%)

Lower House

Petro's base of support (~20%)

Duque's base of support (~75%)

Source: Registraduria, Semana, BNP Paribas

18

POLLS | PARTY PREFERENCES  Almost half of the Colombian electorate does not identify with any political party, polls say  Those who do, however, tend to prefer right-of-centre parties, with only a few established left-wing forces  Former president Álvaro Uribe’s Centro Democrático also figures high in party preferences surveys

WHICH POLITICAL PARTY DO YOU MOST IDENTIFY WITH? 50 45 40 35 30 25 20 15 10 5 0

47.7 Sep-17

Dec-17

Jan-18

Feb-18

May-18

Apr-18

Left-wing

20

15.2

3.5

3.9

8.9 1.9

4.6

2.3

Right-wing 16.1

29.7

34.0

Centre

0

Unidentified

1.4 0%

20%

40%

60%

80%

Source: Cifras y Conceptos, El Tiempo, Semana, EcoAnalitica, YanHass,, BNP Paribas

June 12, 2018 | 19

100%

VOTER PREFERENCES | POPULARITY BY PARTY OF WHICH PARTIES’ CANDIDATES YOU WOULD VOTE FOR? (% of total respondents)

Apr-18

50 Sep-17

40

Dec-17

Jan-18

Feb-18

46

30 20 10

19

4

0

5

8 2

4

2

0

1

Source: Cifras y Conceptos, El Nuevo Siglo, BNP Paribas

June 12, 2018 | 20

VOTER PREFERENCES | IDEOLOGICAL PREFERENCE  Colombia generally leans to the right, with historical resistance to leftist forces  Young adults are generally more sympathetic towards the left than older adults  The centre-leaning and unsure electorate is the largest, showing room for growth outside the polarised camp

By income

By age

By region

Source: Cifras y Conceptos, El Nuevo Siglo, BNP Paribas

June 12, 2018 | 21

VOTER PREFERENCES | PROFILE OF BLANK VOTERS   

Typical blank voters (around 10-15% of those surveyed) are from the upper middle income group and are from larger cities Bogotá, where Fajardo won with almost 40% of votes, has the highest number of blank voters, who usually vote for left-of-centre names more than the average in Colombia In the first round, polls predicted around 12% of blank voters – which reduced by 6pp until election day, mostly favouring centre-left Fajardo

BY CITY SIZE

BY REGION

BY GENDER

BY AGE

BY INCOME GROUP

20 16 12 8 4 0

Source: Mitofsky, BNP Paribas

CLICK HERE TO CHECK COLOMBIA’S DEMOGRAPHICS June 12, 2018 | 22

POLLS | LIKELIHOOD OF VOTING

DO YOU PLAN ON VOTING IN THE SECOND ROUND? (% of potential voters, June 2018) Definitely not 11% Probably not 3% Unsure 11% Probably 7% Definitely 52%

Definitely not 19% Probably not 6%

Pacific

Unsure 11% Probably 16%

Caribbean

Probably not 5%

Antioquia/ Eje Cafetero

Unsure 12% Probably 14%

Unsure 6%

Bogotá and the Caribbean, two of Gustavo Petro’s strongholds, are expected to have the highest turnout in the second round, increasing his chances

Definitely not 16%

Definitely 53%

Probably not Definitely not 3% 7%

Bogotá

Probably 9%

Definitely 48%

Definitely 75%

Probably not Definitely 4% Unsure not 10% 9%

Centre-East

Probably 10%

Definitely 67%

Regions that favour Petro

SEE HERE WHO WON IN EACH STATE, IN THE 2018 FIRST ROUND

Actual turnout, first round (2018) 65

Bogotá

Regions favour Duque

47

59

55

Caribbean Centre-East Antioquia

51 Pacific

Source: Serman, BNP Paribas

June 12, 2018 | 23

POLLS | VOTING INTENTIONS BY REGION VOTING INTENTIONS, BY REGION (% of potential voters, June 2018) Iván Duque is seen winning indisputably in the centre and affluent Antioquia, but should face tough competition from Gustavo Petro in densely populated Bogotá (17% of population), Valle (10%) and the Caribbean (23%)

Antioquia and Eje Cafetero

Bogotá

17%

18%

Antioquia Valle del Cauca

14% 23%

10% 12% 2%

More populated

7 46 47

15

Less populated

12

Centre-East

73

Pacifica

SHARE OF REGION (in % of the total population) 4%

Caribbean

16

46

11

Bogotá 13

39

44

28

61

43

Centre Pacific Caribbean Centre Other

Source: Polimétrica, DANE, BNP Paribas

June 12, 2018 | 24

PUBLIC PERCEPTIONS | PREDICTION MARKET WHO WILL BE ELECTED PRESIDENT OF COLOMBIA IN 2018? 100

Volume of trades 7000 6000

80 Iván Duque Gustavo Petro Sergio Fajardo Germán Vargas Lleras

60 40 20 0

See here in real time and for details on methodology

5000 4000 3000

Germán Vargas Lleras Sergio Fajardo Gustavo Petro Iván Duque

2000 1000 0 Mar-18

Apr-18

May-18

In the bets predictions’ market, Iván Duque’s chances of winning is around 95%

Mar-18

Apr-18

May-18

Source: PredictIt.com, BNP Paribas *: Data taken from PredictIt..com, which allows you to make predictions on future events by buying shares in the outcome, either Yes or No. Each outcome has a probability between 1 and 99 percent.

25

VOTER PROFILES | INTERNET USE DO YOU USE THE INTERNET OCCASIONALLY, IN OR OUTSIDE YOUR HOME?

100

90 80 70 60 50

Source: Ipsos, IAB, BNP Paribas

8 out of 10 Colombians are at least occasional users of the web Usage reaches at least 50% across all population subgroups

CLICK HERE TO CHECK EACH CANDIDATE’S POPULARITY ON SOCIAL MEDIA 26

VOTER PROFILES | SOURCES OF NEWS

HOW OFTEN DO YOU FOLLOW NATIONAL NEWS ON YOUR COUNTRY? I don't

100%

Somewhat closely

Very closely 29 27

50% 0%

Italy Mexico Brazil Indonesia France Russia Chile Canada Spain Israel Argentina UK Colombia Japan Australia Peru India Germany US South Africa Turkey

44

-60

-40

Very well

DOES THE MEDIA REPORT DIFFERENT POLITICAL POSITIONS ON ISSUES FAIRLY? (%)

HOW ACCURATELY DOES THE PRESS IN YOUR COUNTRY REPORT NEWS? (%)

HOW DOES THE PRESS REPORT ON GOVERNMENT LEADERS AND OFFICIALS? (%) Not well

Almost half of Colombians say they follow national news very closely, but see their country’s press in a negative light

Not well

Quite well

Very well

Not well

Quite well

Very well

Colombia

Colombia

Colombia

World

World

World

Latam

Latam

Latam

-20

0

Source: Pew Research, BNP Paribas

20

40

60

CLICK HERE TO SEE HOW COLOMBIANS FEAR MOST -60

-40

-20

0

20

40

60

-60

-40

-20

0

20

Quite well

40

60

27

VOTER PROFILES | EDUCATION, RELIGION AND AGE None 15% Basic education 2%

35% High school

48% University degree

49

Education level

Religion

Other, 2% Catholic, 79%

Unaffiliated 6% Protestant 13%

65 or more 50 to 64 9% 11%

AGE & GENDER

15 to 24 24%

51

25 to 54 56%

Source: YanHass, DANE, BNP Paribas

28

VOTER PROFILES | GEOGRAPHICAL LOCATION COLOMBIA: POPULATION DENSITY

COLOMBIA: POPULATION BY STATE

The cities of Bogotá, Medellín and Cali are home to roughly one in every four Colombians The Eastern part of the country is largely unpopulated

Source: DANE, BNP Paribas

CLICK HERE TO SEE HOW PEOPLE VOTED IN EACH STATE

29

PUBLIC PERCEPTIONS | WHAT COLOMBIANS WORRY ABOUT MOST IMPORTANT PROBLEM OF COLOMBIA (% of voters, June 2018) Insecurity

21

Unemployment

15

Healthcare

15

Economy

14

Corruption

11

Education

6

Cost of living

4

Peace process

4

Armed conflict

2

Taxes

2

Source: Latinobarómetro, BNP Paribas

30

PUBLIC PERCEPTIONS | PREFERENCES I WOULD NEVER VOTE FOR A… (%, Jan 2018) A former paramilitary

89

A former guerilla

84

A Christian minister

62

A LGBTQ

56

A retired military

54

A catholic priest

49

An indigenous person

25

A black person A woman A man

7 out of 10 Colombians worry that their country could end up like neighbour Venezuela Around 800k Venezuelans entered the country in 2017

AMONG THESE, WHAT DO YOU FEAR? (% of those surveyed, Feb 2017) 68

33

17 10 9

54

That Colombia turns into another Venezuela

An economic Health problems crisis among family members

31

25

24

Insecurity

Delinquency

Unemployment

Source: EcoAnalisis, YanHass, Polimétirca, BNP Paribas

31

VOTER PROFILES | ISSUES THAT MATTER MOST 7 out of 10 Colombians were pessimistic believe their country is heading the wrong way Trust in political institutions plunged 71 57 42 10

16

Uncertain 8% Right direction, 29%

Wrong direction, 63%

MAIN PERSONAL WORRY (% OF POTENTIAL VOTERS, Jan 2018)

TRUST IN INSTITUTIONS (%)

15

COLOMBIA IS HEADING IN THE… (Jan 2018)

21

22

Education Violence Taxes 1% The economy 2% 1% 2% Peace process 7%

Insecurity 22%

Cost of living 14%

Healthcare 21%

Corruption 14% Unemployment 16% Source: YanHass, Invamer, Latinobarometro,,BNP Paribas

32

CONTENTS

1



NEW CONTENT

GENERAL INFO

BIOS & PARTIES



• GUSTAVO PETRO


• LEFT OR RIGHT?

• SOCIAL SECURITY



• WEB POPULARITY

• OIL & MINING




• TAXES

THINK?

• ABSTENTION


4

• IVÁN DUQUE

• CALENDAR

POLICIES

• OUR RECENT WORK

3

2

UPDATED CONTENT






BREAKING NEWS June 12, 2018 | 33

2018 ELECTION CALENDAR Elections to Congress

Uribe-Pastrana and Petro coalitions hold primaries

Mar 9th Deadline for the registration of presidential candidates

Mar 11th

2nd round

Debates between candidates

Mar 16th Deadline for the registration of coalitions

Apr-May

(if none of the candidates get 50% of votes or more)

May 27th 1st Round

Jun 17th

Aug 7th Elected president takes office

34

WHAT’S AT STAKE | COLOMBIA: NATIONWIDE

President

FOUR-YEAR TERM

102 Senators

FOUR-YEAR TERMS; all seats

166 Deputies

100 by proportional nationwide vote; 2 for indigenous Colombians; 5 for FARC

FOUR-YEAR TERMS; all seats

Seats allocated by largest remainder method (proportional, party listings) Source: Registraduría,, BNP Paribas

35

POLITICAL SWAY | LOCAL DYNAMICS The ruling centrist coalition holds governorship in 5 out of every 10 states

PARTIES’ SHARE OF STATE GOVERNSHIPS

0%

20%

40%

60%

PARTIÉS’ SHARE OF MAYORSHIPS

80%

100%

Centro Democrático and Conservative parties hold a third of the mayorships

Strongholds are small/medium-sized cities

Left-of-centre parties hold less than 10% of total offices

Centre-left candidacies head the two largest cities, Bogotá and Medellín Source: Registraduria, BNP Paribas

36

PARTIES | POLITICAL SPECTRUM BY CANDIDATE CLICK HERE FOR OUR REGULARLY UPDATED POLL OF POLLS

CLICK HERE FOR CANDIDATES’ ECONOMIC POLICY PROPOSALS Source: AmericasQuarterly,, BNP Paribas

37

PARTIES | POLITICAL SPECTRUM BY PARTY CLICK ON THE PARTY LOGOS TO CHECK COALITIONS

Left-wing

Centre

Right-wing

CLICK HERE FOR CANDIDATES’ IDEOLOGIES

Source: Semana,, BNP Paribas

CLICK HERE FOR THE MAIN PARTIES’ PLATFORM 38

PROPOSALS | ECONOMIC POLICY PLATFORMS Coalitions

Red boxes stand for potentially distressing policy proposals

Taxes

BanRep /Rates

Economic activity

Fiscal rule/Budget

Trade

CENTRO DEM. Iván Duque

Defends tax cuts to companies, a “full” fiscal reform, make it simpler to pay taxes and to reduce evasion

Defends independence of BanRep and current framework

Promises to raise GDP growth to 4.5% through productivity, criticised the excessive red tape in Colombia

Says budget deficit track record has been very poor in recent years and that one of its compromises is with fiscal responsibility

Defended further integration in global value chains; take part in the TPP deal

GUSTAVO PETRO

Defended a tax reform which raises taxes on dividends and multinationals, plus eliminating tax breaks

Has criticised rate hikes in the past; wants to increase role of public banks

Wants “a completely new model” based on capital goods and agro; moving away from oil and coal

Defends more public sector investment; wants to double spending on education and increase the role of the state in pensions

Wants to keep a weak peso to boost domestic industry and “protect” producers from imports

We compromise to do the reforms that historical liberalism hasn’t done To democratise the credit it is crucial to have public banks that compete for loans in the cities (…) and a strong development bank for the rural sector Source: Party websites, Semana,, ElNuevoSiglo, Semana, BNP Paribas

GUSTAVO PETRO

The tax burden in our country is suffocating and that impedes that many people enter the labour force We need to eliminate the wastefulness of the State, unnecessary expenditures, reduce tax evasion and the VAT IVÁN DUQUE 39

PROPOSALS | TAXES

Summary

VAT (value-added tax) CST (corporate tax) Income tax

Other taxes Land tax

Tax evasion Tax breaks Fiscal rule

Click here for a thorough analysis on each candidates’ proposals

Gustavo Petro

Humberto De la Calle

Sergio Fajardo

Germán Vargas Lleras

Iván Duque

“A social vision with a tougher stance on the big capital”

“Balancing higher burden on the rich with tax cuts to companies”

“Fiscal discipline through more burden on the rich”

“Balance out lower corporate taxes with tackling tax evasion”

“Less tax burden for all, focus on companies, also tackling tax evasion”

Reduce it

Reduce it

Keep current levies

Keep current levies

Keep current levies

Keep current levies

Reduce it

Keep current levies

Reduce it

Reduce it

Increase it and broaden its

Increase it and broaden

Increase it and broaden its

reach

its reach

reach

broaden its reach

Broaden its reach

--

--

Eliminate the tax over

--

Create a tax over profit repatriation by foreign companies Update the matrix of

Update the matrix of

values

values

Increase it

Increase it

Not key for revenue

Not key for revenue

Not key for revenue

provisions

provisions

provisions

Leave only those for small

Eliminate them all Preserve it

dividends --

Key for the fiscal plan

Key for the fiscal plan

Leave only those for small

Leave only those for the

Leave those for SMEs and

companies (SMEs)

companies (SMEs)

agriculture

the agriculture

Revise it

Preserve it

Preserve it

Revise it

Source: La Silla Vacia (click here for detailed analysis, in Spanish), BNP Paribas

40

PROPOSALS | FISCAL IMPACT  Candidate’s proposals imply a sizable fiscal impact, to be balanced out by less tax evasion or new taxes 

While Duque proposes to reduce “unnecessary” expenditures, Petro proposes an across-the-board spending increase

Gustavo Petro (Colombia Humana) - Initially, defended a more relaxed fiscal rule but now promises to respect the framework in place as a compromise with the Greens - Aims to reduce deficit despite more spending, by tackling corruption and eliminating tax breaks - Defends more public investment and an across-the-board boost to social outlays - Free tertiary education for all youth (+1pp of GDP) - Scrap the current private co-partnership health scheme (EPSs), favouring the public health system (+1pp of GDP) - Guarantee pensions for all the elderly (compared to a 23% coverage today), through a fixed minimum income benefit, maintained by the government (+4pp of the GDP)

Up to 7pp of GDP

Iván Duque (Centro Democrático) - Defends a reduction in the tax burden (+2pp of GDP) - Tax cuts would be balanced out by less evasion (50% less in four years, -1.5pp of GDP) and further advances to job formalisation - Proposes the transition of a budget balance target to a spending ceiling, making amends to the current fiscal rule so it adopts a “counter cyclical” approach - Pledges a structural cut to public spending, with 10% less discretionary outlays through efficiency gains (-0.5pp of GDP) - Build 900k houses and rebuild 600k of them (0.2pp of GDP)

Estimated fiscal impact

Up to 3pp of GDP

WE SPOKE WITH THE ADVISORS OF THREE OF THE MAIN CANDIDATES AND ANALYSED THEIR PLATFORMS. SEE WHAT WE FOUND. Source: Party platforms, Candidates’ economic advisors, IMF, World Bank, BNP Paribas

41

PROPOSALS | OIL & MINING Gustavo Petro is staunch critic of the mining industry in Colombia, pledging to “democratise” the energy sector as a whole Both Duque and Petro have shown reservations to alternative means of oil exploration, with Petro opposing to it in definite

 

Colombia, Oil supply

(mbpd)

1.1

1.0

0.9

0.8

Oil output has contracted by 15% since the peak; it will keep contracting without additional investment

Barrels/Day, million

0.7

0.6

Colombia, Oil supply

0.5

(mbpd)

0.4

0.3

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

General view

Crude exploration royalties

Referendums on new exploration projects

Ecopetrol

Fracking

IVÁN DUQUE

Recognises the need to diversify away from energy commodities, but pledges to reduce red tape in the sector, reduce legal uncertainty, and attract investment

Wants revenues from oil to be partially saved (more than currently) and partially to be distributed to producer municipalities

Against it - wants more ties between oil companies and producer regions instead, criticises what he sees as a conflict-generating strategy

Supports the current framework

Against it given other means of extraction

GUSTAVO PETRO

Aims to scrap crude exploration as a relevant economic activity, instead focusing on clean energies

Royalties could be used to fund his proposal of a new development model

In favour, claiming that exploration should be stopped in regions opposed to it, proposes to expand referendums

Suggested using SOE’s as a potential funding source for renewable sources of energy; has criticised market-driven approach in the past

Opposes indefinitely

Where candidates stand on…

Source: Party websites, Semana,, ElNuevoSiglo, Semana, BNP Paribas

42

PROPOSALS | OIL & MINING  Oil & mining remain the main source of foreign investment for Colombia  Tax and labour reforms have helped to reduce dependency on oil, but investment plans of local government are still linked to revenues from crude royalties. Local governments get around 1pp of GDP per year from the “regalías” Law

FOREIGN DIRECT INVESTMENT, BREAKDOWN BY SECTOR (USD bn, 4q sum) Retail & hotels 20 Logistics & Communication 18 Public services Manufacturing 16 Utilities 14 Services Mining & Oil 12 Agro 10 8 6 4 2 0 2002 2004 2006 2008 2010 2012 2014 2016 Q1 2018

4

Oil-related revenue accruing to the Central Government (% of GDP) Dividends paid by Ecopetrol Taxes paid by oil companies

3 2

0.7

1 0

2002

2004

2006

2008

2010

Despite recent diversification, the oil and mining sector is still responsible for around a third of Colombia’s FDI inflows

2012

2014

2016

2018

Click here for our report on the relevance of oil & mining to Colombia’s external accounts

Source: BanRep, MinHacienda, BNP Paribas

43

PROPOSALS | VIEWS FOR THE ECONOMY   

The main business unions have voiced support for Iván Duque in the second round Confidence levels are expected to surge once the election uncertainty wanes Underinvestment has been the norm in recent years, not only in the energy sector

Consumer confidence, breakdown (0=neutral)

Business confidence (0=neutral)

Gross fixed investments (2010=100, sa)

Development model

Labour laws

IVÁN DUQUE

- His proposals for the economy centres on lower tax burden - Boosting the “orange” economy – ie, creative and IT industries - Deepening and strengthening capital markets, diversifying financing sources for companies and social programmes

- Reduce stringency of labour laws, exploring regional minimum wages - Reduce labour costs through less taxes on employment

GUSTAVO PETRO

- Active use of state-owned banks with the creation of a “popular bank” to “democratise access to credit” - More public sector investment with focus on urban infrastructure and railroads - Urban and rural land reform, aiming to make properties serve their social function, but without expropriation

- Pledged to restrict outsourcing in the financial, transportation, and other services sectors - Pursue more labour formalisation, but not at the cost of less labour rights - Assure “decent living conditions”


44

PROPOSALS | TRADE Colombia is a relatively open economy; its trade deals cover more than 50% of the world’s GDP The country has announced intentions to join the Transpacific Partnership deal (CTPP) and deepen ties with the Mercosur

 

There are several bottlenecks that need to be resolved for the country to take full advantage of trade deals and integrate with global value chains



CURRENT ACCOUNT BALANCE, BREAKDOWN (% of GDP, 4q sum)

Trade

3

Iván Duque

- Diversify trade partners and exports - Strengthen existing trade deals and enhance their potential through technical advice to companies, particularly SMEs - Integration in global value chains; stimulus to value-added exports - Exempt capital goods imports from tariffs to boost gross fixed investments

Gustavo Petro

- Renegotiation of the country’s trade deals, aiming to reduce trade deficit on goods, and revising clauses which “threaten national sovereignty” - Protect sectors from imports, focusing on domestic production and consumption, and aiming to “reindustrialise strategic sectors”

2

Remittances

1

Trade balance

0

-

1

The current account shortfall has narrowed 2pp, due almost to a lower trade deficit

Services

-

2

Primary income

-

-

-

3

4

5

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17


45

PROPOSALS | SOCIAL SECURITY Colombia will undergo a major demographic shift in the next 20 years, with the current social security system seen as unfeasible Both candidates agree to change the current scheme and to eliminate subsidies to upper income retirees – but have promised not to raise the minimum retirement age (57 for women and 62 for men), seen by many as too low Petro has the most radical approach, which include more intervention in private funds and guarantees of a minimum income for all retirees, funded by the government

  

AGE-DEPENDENCY RATIO

Proposals for

100

Low Fertility

Iván Duque

- Reform the pensions system - Eliminate taxes on pensions - Subsidise only those pensions which correspond to less than 2 minimal wages, eliminating subsidies for higher pays

Gustavo Petro

- Eliminate competition between public and private pension plans - Reduce the power of privately managed funds - Increase substantially the coverage of public pension plans, including informal workers

90

Medium

80

Fertility 70

60

Ratio

50

40

SOCIAL SECURITY

Constant Fertility

30

20

10

0

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100


46

CABINET | MINISTRY OF FINANCE

Names considered for the Finance Ministry position (according to newswires) Felipe Restrepo

Alberto Carrasquilla

Co-author with Duque of “The Orange Economy”, Restrepo worked alongside him during his years in the Interamerican Development Bank (IADB)

Iván Duque

In the book, they defend incentives for the creative goods and services industries, as a way to diversify away from commodities and boost high-skilled jobs

- Bogotá’s Finance Secretary between 2012 and 2015, during Petro’s mayorship, and part of the Tax Reform commission of 2016 - Is perceived as very aligned to Petro’s ideas in economic policymaking, being part of the responsible for the candidate’s

Petro

platform for Bogotá, the 2014 and 2018 campaigns - He supervised a major injection of funds in the city-owned telecom company (ETB), and his tenure was perceived then as fiscally unsound

experiences in the World Bank, Brookings, BanRep, the IMF, and was a Research leader for the IADB - In his monthly column , defended a tax reform that increases collection, but at the same time incentivises businesses reducing red tape - Defended reductions to “regressive” subsidies, such as those to pensions

Ricardo Bonilla

Gustavo

Finance Minister between 2003 and 2007, has

Click here for a thorough analysis on each candidates’ proposals Juan Ricardo Ortega

Luis Echeverri

Director to the National Directorate of Taxes and Customs (DIAN) until 2014, when he left

-

Lawyer and economist,

amid life threats; he also served as

manages Duque’s

Vice Finance Minister, chief economist for BBVA

campaign, and worked

in Colombia and in the Planning Department,

alongside him in the

and took part of the Tax Reform commission of

IADB

2016

-

Echeverri also managed

In his monthly column, defended a new taxation

Uribe’s campaign in

scheme to rural properties, to reduce conflicts,

2002

and often writes on ways to reduce corruption

Guillermo Perry

José Ocampo

Finance Minister between 1994 and 1996; served

- Latest addition to the BanRep board of officials

as the chief economist for Latam in the World

and is seen as a more dovish voice, Ocampo has

Bank (1996-2007)

a diversified work as a scholar, with focus on

In a recent work, Perry defended that Latin

inequality and economic history

America rejects the temptations of protectionism

- He often defends a strengthening of the

and further opened the economy to Asia and

agroindustry as a way to boost growth

Europe

- In a presentation made in Feb 2018 revising

Perry also often defends more “open

industrial policies, Ocampo criticised market

regionalism”, which would mean more ties to

reforms made in Latam, saying the transition

other Latam countries

“could’ve been to a export-driven model (…)

He has defended sustained increments to

with strong state intervention, such that of East

productivity, seeing signals of the Dutch disease

Asia”

Mauricio Cabrera - In his weekly column, deemed as positive the entrance of Colombia to the OECD, saying the organization “does not defend neoliberal policies” but socially responsible - In April, said that, irrespective of the elections outcome, the next government will need to raise taxes

Source: LaSillaVacia, Semana, Dinero, ElTiempo, Pulzo, BNP Paribas

47

PARTIES | IDEOLOGIES Pro-market Clara Lopez 5

Pro-peace deal

FARC

Iván Duque 0

Gustavo Petro

Alejandro Ordoñez

-5

Greens-Polo-Fajardo coalition Conservatives

Source: Party websites, Semana,, Reforma, Semana, BNP Paribas

Vargas Lleras Liberals

CLICK HERE FOR THE POLITICAL SPECTRUM 48

POPULARITY ON THE INTERNET | CANDIDACIES 3500

Followers/Likes

Subscribers

3000

Twitter Facebook YouTube (RHS)

2500 2000

20

15

10

1500 1000

5

500 0 Change since last tracker

(in followers)

Gustavo Petro (left)

Piedad Córdoba

Clara Lopez (left)

7%

3%

2%

Sergio Claudia De la Calle Marta Iván Duque Vargas Lleras Fajardo Lopez (centre-left) Ramirez (right) (right) (centre-left) (centre-left) (centre-right) 38%

6%

74%

32%

98%

0

6%

Source, Social medias, BNP Paribas

49

POPULARITY ON THE INTERNET | CANDIDACIES Sergio Fajardo

Humberto de la Calle

German Vargas Lleras

# of followers

# of followers

# of followers

1.200k

115k

760k

575k

50k

340k

2.5k

0.5k

5.5k

Gustavo Petro

Claudia López

Iván Duque

# of followers

# of followers

# of followers

3.000k

1.050k

275k

1.100k

615k

460k

9.0k

18.8k

5k

Clara Lopez

Marta Lucia Ramirez

Álvaro Uribe

# of followers

# of followers

# of followers

310k

375k

5.200k

250k

270k

1.450k

1.7k

1k

8k

Source,, BNP Paribas

CLICK ON CANDIDATE ICONS FOR WEBSITE AND SOCIAL MEDIA PAGES 50

PUBLIC PERCEPTIONS | INTEREST IN THE WEB RELATIVE POPULARITY IN WEB SEARCHES, GOOGLE TRENDS (100=max) 120 100 80 60

Relative popularity in Google, by Colombian states

Gustavo Petro

Iván Duque

Iván Duque Gustavo Petro

40 20 0

Jun-17 Sep-17 Dec-17 Mar-18 POPULARITY OF ELECTIONS RELATIVE TO TWO OF THE MAIN SOCCER TEAMS (100=max) 120 100 80

Elecciones Atlético Nacional Millionarios FC

60

 Interest in the election only tends to really

40 20 0

2004-01

2006-01

2008-01

2010-01

2012-01

2014-01

2016-01

2018-01

pick up in the actual month in which it takes place, internet data suggests

Source: Google, BNP Paribas

51

CONTENTS

1



NEW CONTENT

GENERAL INFO

BIOS & PARTIES



• GUSTAVO PETRO


• LEFT OR RIGHT?

• SOCIAL SECURITY



• WEB POPULARITY

• OIL & MINING




• TAXES

THINK?

• ABSTENTION


4

• IVÁN DUQUE

• CALENDAR

POLICIES

• OUR RECENT WORK

3

2

UPDATED CONTENT







CANDIDACIES | GUSTAVO PETRO GUSTAVO PETRO VOTING INTENTIONS PER VOTER GROUP

Bogotá Caribbean 18-24 yrs-old Lower-middle class Poorer 25-34 yrs-old Women Larger than 900k 100-900k Smaller than 20k 45-54 yrs-old 35-44 yrs-old Centre-East Men Upper Middle class 20k-100k +55 yrs-old Pacific Upper-middle class Antioquia/Eje Cafetero

8

7

2

5 5

7

11 13 11 13 10 13 12

19 18

GUSTAVO PETRO

Typical voter





BIO

Positive

9

Negative

Gustavo Petro’s typical supporters are from either Bogotá or the Caribbean, young, and lower-middle class Source: YanHass,, El Nuevo Siglo, BNP Paribas

Po

Born in Ciénaga de Oro



Mayor of Bogotá (2012-15),



Senator (2006-10), Deputy (1998-2006)



11 10 9 11 9

57- years-old

Economist (Externado)



More popular among the youth, internet users



Nationwide recognition from work as journalist; opinion voters



Pro-interventionism views on the economy, disagrees with current macroeconomic policy consensus



Situation in Venezuela

53

CANDIDACIES | GUSTAVO PETRO

Gustavo Petro set in stone 12 “commandments” (compromises) in a nod to centre-leaning voters

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12)

I won’t expropriate I won’t convene a Constitutional Assembly I will manage public funds as sacred resources I will boost private activity, business-making, and formalisation I will guarantee a pluralist democracy and the respect for diversity I will respect the State of Law I will respect the peace agreement I will nominate the most capable ones [for cabinet] I will guarantee gender equality I will boost the ordinated transition to clean energies I will boost high quality and free-for-all public education I will guarantee complying with the results of the consultation against corruption

Source: Semana, BNP Paribas

The compromises were set in order to seal the support from two centrist figures, Claudia López (the vice-presidential formula to Sergio Fajardo) and Antanas Mockus (who went to the secondround in 2010, winning 30% of the votes) Both are popular among Fajardo’s electorate, appealing to well-educated, urban voters, and their support is seen as key for the odds of Gustavo Petro

54

CANDIDACIES | GUSTAVO PETRO Some reasons why Petro could get better than expected numbers: Corruption. Colombia has seen a flurry of scandals that have reduced confidence in the government and resulted in support for anti-establishment names. Petro is seen as the main beneficiary of this shift, with Vargas Lleras and De la Calle emerging as the main losers. Shift in broader sentiment. Colombians are now more worried about social issues (education, healthcare and inequality) and less about insecurity and guerillas, issues that have generally favoured right-leaning candidates. Economic downturn. The recent economic downturn could result in support for policy proposals alternative to the current macro framework, such as those put forward by Petro – although voters could also favor Duque and uribismo, given that Uribe’s tenure is remembered by the good performance of the economy. Turnout. Election turnout in Colombia is generally around 50% of potential voters, meaning the traditional rightleaning balance of power could shift depending on how certain groups vote.











Petro appeals to exactly those groups that have historically abstained from voting: the youth (32%), poor families (32%), Bogotanos (27%) and inhabitants of other big cities (25%).

Why we think he is unlikely to win, though: • •

•

•

•

Rejection. By far, Petro faces the highest rejection rate. Besides, his rejection is across all population groups – including the youth to whom he appeals most. Profile of undecided voters. Most undecided voters are from groups that are most opposed to Petro -- the elderly (12%), those in small cities (10%) and middle-to-higher income classes (11%), according to a YanHass survey. Venezuela. The collapse of northern neighbour Venezuela and the dire conditions in Caracas have resulted in some two million immigrants coming to Colombia. Petro is seen by many voters as resembling Chávez during his early days. Petro hasn’t mellowed. The candidate hasn’t softened his tone since his speech during the first round of campaigning. On the contrary, he has toughened up in some areas – proposing to “buy” land for redistribution, for instance. This has narrowed his appeal and increased resistance to his name. The allignment of forces in the second round. Although resistance for Duque’s uribismo is strong among some urban, educated groups, it is much higher for Petro. •

Source: YanHass,, El Nuevo Siglo, BNP Paribas

Vargas Lleras’s coalition parties and the Liberal party has formally adhered to Duque’s campaign. However, Fajardo’s coalition (Polo and Green) could support Petro in a second-round.

55

PARTIES | NATIONAL UNITY (DE LA U) OPINION OF PRESIDENT SANTOS’ HANDLING OF… (Sep 2017) International relations

41

Dealings with FARC

37

5

45

4

9

57

2

Economy

20

4

73

3

Health

20

2

77

1

Security

16

3

Mining

16

4

Organised crime

16

3

79

2

68

12

76

5

Corruption

13

2

82

3

Unemployment

13

2

83

2

%

0

20

40

60

80

100

Positive Neutral Negative Didn't answered

SEATS, SENATE

SEATS, CONGRESS

President Santos’ party chose not to have a candidate “DE LA U” JOINED GERMÁN VARGAS LLERAS’S CAMPAIGN IN A CENTRELEANING COALITION

COLOMBIANS DISAPPROVE SANTOS ON MOST ISSUES, POLLS SAY, BUT “DE LA U” REMAINS AS ONE OF THE LARGEST PARTIES

Source: YanHass, Congress of Colombia, BNP Paribas

56

PARTIES | CONSERVATIVE CENTRE-RIGHT CONSERVADORES IS ONE OF COLOMBIA’S TWO TRADITIONAL PARTIES, ALONGSIDE THE LIBERALS, WITH STRONG PARTY IDENTIFICATION THE PARTY IS AMONG THE LARGEST IN CONGRESS AND HOLDS A SIZABLE SHARE OF MUNICIPALITIES AND GOVERNORSHIPS SEATS, CONGRESS

The Conservative party has decided on supporting Vargas Lleras, but some 30% of the party’s congressman PARTIÉS’ SHARE OF MAYORSHIPS

SEATS, SENATE

Source: parties and candidiates websites, El Nuevo Siglo, ISA-GEA,, BNP Paribas

57

COALITIONS | URIBE-PASTRANA RIGHT-WING COALITION POPULARITY OF HIGH-PROFILE POLITICIANS IN COLOMBIA (% of those surveyed) Andrés Pastrana

25

Ernesto Samper

26

César Gaviria

30

Juan Manuel Santos

30

Álvaro Uribe Favourable

17

58

22

52

26

45

6

65 36

56 Unfavourable

7

Neutral

• After preliminary surveys, Centro Democrático chose young Senator Iván Duque as its candidate (see here voting intentions for the coalition primaries)

Right-of-centre former presidents Uribe and Pastrana have formed a coalition • ALVARO URIBE REMAINS HIGHLY POPULAR • PASTRANA BROUGHT WITH HIM TWO TIMES CANDIDATE MARTA RAMIREZ, A IMPORTANT PLAYER IN THE CENTRE-RIGHT SEATS, CONGRESS

SEATS, SENATE

Source: El Tiempo, YanHass, Caracol Radio, BNP Paribas

58

IVÁN DUQUE | PROFILE AND VICE-PRESIDENTIAL CANDIDATE MARTA L. RAMÍREZ

IVAN DUQUE

Iván Duque’s running mate

The Centro Democrático candidate 

41-years-old

 

BIO





Positive

Negative





Born in Bogotá

Senator (2014present)

BIO



Inter American Development Bank consultant (2001-2010)



Lawyer (Georgetown)





Young, fresh face;



Moderate speech



Inexperienced



Faces strong resistance among some sectors

63-years-old Born in Zipaquirá

Senator (2006-09), Defense Secretary (2015), Foreign Trade (1998-2002)

 DUQUE AND RAMIREZ ATTRACTED 6 MILLION VOTERS IN THE CENTRE-RIGHT PRIMARY, WITH DUQUE WINNING 68% OF VOTES  Ramirez was announced as Duque’s vice-presidential candidate after the results were known 6.0

6.0 4.0

4.0

Lawyer (Catholic U)

2,8

2.0 Positive

Experienced in government



Pro-trade



National recognition; appeals to centrists

0.0

Has failed in elections before

3.3

Iván Duque Total, right-wing Gustavo Petro Total, left-wing primary primary

Public opinion, Marta Ramirez (% of surveyed, Apr 2018) Doesn't know her name, 8%

Negative 

Winner of the 1st round in 3.7 million votes 2014

Negative view, 36%

Positive view, 56%

Source: El Tiempo, El Colombiano, El Nuevo Siglo, and politicians’ websites, BNP Paribas

59

CONTENTS

1

POLLS • VOTING INTENTIONS

NEW CONTENT

2

3

GENERAL INFO

BIOS & PARTIES

• CALENDAR

• IVAN DUQUE

4

UPDATED CONTENT

HISTORICAL SERIES • URIBE-PASTRANA COALITION • PRESIDENT APPROVAL

• POLITICAL SPECTRUM • GUSTAVO PETRO

• 2ND BEST

• LEFT OR RIGHT?

• POTENTIAL ELECTORATE

• WEB POPULARITY

• PREDICTION MARKETS • SOURCES OF NEWS

• SERGIO FAJARDO

• VARGAS LLERAS

• GOOGLE TRENDS

• HUMBERTO DE LA CALLE

• 2ND ROUND POLLS


• NEW CONGRESS

• OUR RECENT WORK

…WITH FISCAL IMPACT

• OUR TEAM

…OIL & MINING SECTOR

…by their proposals on taxation

• OVERVIEW


• PLATFORM


• RULING PARTY, “U”


• CONSERVATIVE

• ABSTENTION • REGIONAL ASPECTS

PRIMARIES + CONGRESS VOTE: OUTCOME STUDY

CONGRESS VS PRESIDENTIAL CONGRESS VS OUTCOMES PRESIDENTIAL OUTCOMES


PRESIDENTIAL APPROVAL RATINGS  As with most Latin American leaders, the popularity of incumbent President Juan Santos has plunged in recent years (and not recovered)  His disapproval rating deteriorated as the FARC peace process negotiations progressed and the economy slowed  This contrasts with the high popularity of former President Álvaro Uribe throughout his tenure;  The former president currently heads, Centro Democrático (CD), one of the largest parties in Colombia

DO YOU APPROVE THE PRESIDENT’S WORK? (% of voters) 80 70 60 50 40 30

January 2018:

20 10 0 2003

Álvaro Uribe (2002-2010) 2005

2007

2009

20%

Juan M. Santos (2010-2018) 2011

2013

2015

2017

Source: Latinobarómetro, YanHass, BNP Paribas

61

CONGRESS AND SENATE COMPOSITION IN THE LAST ELECTION (2012) CONGRESS

SENATE

Source: Congress, Senate, ElTiempo, BNP Paribas

62

COMPARING OUTCOMES | CONGRESS VS PRESIDENTIAL BALLOT 2010

75%

Presidency

50% 25%

Congress

Congress

51%

2014

Presidency

56%

Share in total votes

Share in total votes

 Left-of-centre parties usually perform poorly in congressional elections, making up only a small minority  Presidential elections bear little resemblance to legislative elections

30%

10%

0%

Left-of-centre forces

Congress Presidency

69% 69%

75%

Presidency

50%

Congress

25%

8%

23%

0%

Left-of-centre forces Right-of-centre / traditional forces

Right-of-centre / traditional forces

National Unity (centre-right) Polo (left-wing)

Radical Change (right-wing)

Conservative (centre-right)

Liberal (centre)

Total number of Congressmen elected

% change from Congress to Presidential election

% change from Congress to Presidential election

600%

Greens (centre-left)

Polo (left-wing)

400%

Centro Democrático (right-wing)

259%

200%

89% 0%

-200%

National Unity* (centre-right)

84%

1%

Greens(centre-left)

-34%*

Liberal (centre) 0

5

10

15

20

25

30

35

40

Total number of Congressmen elected *% change from Congress to Presidential elections include totals from coalitions.

Source: Registraduría Geral, BNP Paribas.

See here our full analysis on Colombia’s primaries and Congress vote results 63

POLLING PATTERN IN PAST ELECTIONS 2010 1st round results

80

2nd round results

70 69.1%

60

results

results

50.8%

50 45.0%

29.3%

30

40

25.7%

30 20

21.5%

27.5%

10 0

2nd round

1st round

40

46.7%

50

60

2014

6.1% H2 H1 Apr H2 Apr H1 Mar May

H2 1st H2 H1 Jun 2nd May round May round results results

Juan Santos (centre-right National Unity) Mockus (centre-left Greens) Marta Ramirez (centre-right Conservative)

20 10 0

8.0% H2 H1 Apr H2 Apr H1 Mar May

H2 1st H2 H1 Jun 2nd May round May round results results

Juan Santos (centre-right National Unity) Óscar Zuluaga (right-wing Centro Democrático) Enrique Peñalosa (centre-left Greens) Conservative (centre-right)

Source: Covarrubia y Asociados, Datexco,, Reforma, ISA-GEA, Consulta Mitosfky BNP Paribas

64

HISTORIC | LAST POLLS JUST BEFORE ELECTION DATE  Polls have failed to accurately predict recent election outcomes  This include surveys conducted right before the balloting date

70

See here current voting intentions by pollster

J. Santos: 69%

60 J. Santos: 51% 50

No: 50%

40 30

2010 election

(2nd round)

2014 elections

Average of last four polls (winner) Gallup Ipsos

(2nd round)

Peace agreement referendum

Datexco C&C Actual result (winner)

Source: Ipsos, Gallup, Cifras y Conceptos, Datexco, Registraduria, BNP Paribas

65

HISTORIC | ABSTENTION  Nonparticipation during elections in Colombia is traditionally high, above 50%  Voting in Colombia is not mandatory  Voter turnout is historically lower in biggest cities, where preference for left-wing candidacies is higher  The success of left-of-centre candidates also hinges on convincing those voters to cast their ballots  The 2006 election, which saw a competitive centre-left candidate in the 2nd round, however, did not increased turnout 66

70 60

60 50

51 42

60 50

47

54

58

59

57 48

54

55

51

56

60

42

40 30 20 10 0

Source: Registraduria, BNP Paribas

66

ELECTION RESULTS, WINNING PARTY BY STATE (1ST ROUND) 2010



Juan Santos (National Unity), 46.7%  Antanas Mockus (Greens), 21.5%  German Vargas Lleras (CR), 10.1%  Gustavo Petro (Polo), 9.1%

2014



Óscar Zuluaga (Centro Democrático), 29.3%  Juan Santos (National Unity), 25.7%  Marta Ramirez (Conservative), 15.5%  Clara Lopez (Polo), 15.2%

Source: Registraduria,, wikilabs BNP Paribas. Colour stands for which candidate won in each state.

67

RECENT PUBLICATIONS ON POLITICS [1 MIN] VIDEO: LATAM: ELECTIONS OUTLOOK

Brazil: Election Tracker Mexico: Election Tracker Colombia: Centre-right puts up its Duques Colombia: A guide to policy proposals Colombia: Oiling the wheels Colombia: Actions speak louder than words

68

OUR TEAM | LATAM ECONOMIC RESEARCH Marcelo Carvalho

Head of Emerging Markets Research, Latam

Gustavo Arruda Brazil

(55 11) 3841-3418

(55 11) 3841-3466

[email protected]

[email protected]

Florencia Vazquez

Luiz Eduardo Peixoto

Argentina and Chile

Colombia and Mexico

(54 11) 4875-4363

(55 11) 3841-3494

[email protected]

[email protected]

Joel Virgen Mexico and Colombia (212) 841-3015 [email protected]

Follow us on Twitter:

@MCarvalhoEcon

June 12, 2018 | 69

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Switzerland: This report is intended solely for customers who are “Qualified Investors” as defined in article 10 paragraphs 3 and 4 of the Federal Act on Collective Investment Schemes of 23 June 2006 (CISA) and the relevant provisions of the Federal Ordinance on Collective Investment Schemes of 22 November 2006 (CISO). “Qualified Investors” includes, among others, regulated financial intermediaries such as banks, securities traders, fund management companies and asset managers of collective investment schemes, regulated insurance institutions as well as pension funds and companies with professional treasury operations. This document may not be suitable for customers who are not Qualified Investors and should only be used and passed on to Qualified Investors. For specification purposes, a “Swiss Corporate Customer” is a Client which is a corporate entity, incorporated and existing under the laws of Switzerland and which qualifies as “Qualified Investor” as defined above." BNPP (Suisse) SA is authorised as bank and as securities dealer by the Swiss Financial Market Supervisory Authority FINMA. BNPP (Suisse) SA is registered at the Geneva commercial register under No. CHE-102.922.193. BNPP (Suisse) SA is incorporated in Switzerland with limited liability. Registered Office: 2, place de Hollande, 1204 Geneva, Switzerland. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence.

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LEGAL NOTICE (4/6) Brazil: This report was prepared by Banco BNPP Brasil S.A. or by its subsidiaries, affiliates and controlled companies, together referred to as "BNPP", for information purposes only and do not represent an offer or request for investment or divestment of assets. Banco BNPP Brasil S.A. is a financial institution duly incorporated in Brazil and duly authorized by the Central Bank of Brazil and by the Brazilian Securities Commission to manage investment funds. Notwithstanding the caution to obtain and manage the information herein presented, BNPP shall not be responsible for the accidental publication of incorrect information, nor for investment decisions taken based on the information contained herein, which can be modified without prior notice. Banco BNPP Brasil S.A. shall not be responsible to update or revise any information contained herein. Banco BNPP Brasil S.A. shall not be responsible for any loss caused by the use of any information contained herein. Turkey: This report is being distributed in Turkey by TEB Investment (TEB YATIRIM MENKUL DEĞERLER A.Ş., TEB Kampüs D Blok Saray Mahallesi, Küçüksu Cadddesi Sokullu Sokak, No:7 34768 Ümraniye, İstanbul, Turkey, trade register number: 358354, www.tebyatirim.com.tr) and TEB (TÜRK EKONOMİ BANKASI A.Ş., TEB Kampüs C ve D Blok, Saray Mahallesi Küçüksu Caddesi Sokullu Sokak No:7 34768 Ümraniye, İstanbul, Turkey, Trade register number 189356, www.teb.com.tr). Notice Published in accordance with “Communique on Principles Regarding Investment Services, Activities and Ancillary Services” No: III-37.1 issued by the Capital Markets Board of Turkey. The investment related information, commentary and recommendations contained herein do not constitute investment advisory services. Investment advisory services are provided in accordance with investment advisory agreements executed between investors and brokerage companies or portfolio management companies or non-deposit accepting banks. The commentary and recommendations contained herein are based on the personal views of the persons who have made such commentary and recommendations. These views may not conform to your financial standing or to your risk and return preferences. Therefore, investment decisions based solely on the information provided herein may fail to produce results in accordance with your expectations. Israel: BNPP does not hold a licence under the Investment Advice and Marketing Law of Israel, to offer investment advice of any type, including, but not limited to, investment advice relating to any financial products. Bahrain: This document is being distributed in Bahrain by BNPP Wholesale Bank Bahrain, a branch of BNPP S.A. whose head office is in Paris, France (Registered Office: 16 boulevard des Italiens, 75009 Paris, France). BNPP Wholesale Bank Bahrain is licensed and regulated as a Registered Institution by the Central Bank of Bahrain – CBB. This document does not, nor is it intended to, constitute an offer to issue, sell or acquire, or solicit an offer to sell or acquire any securities or to enter into any transaction. South Africa: BNPP is a bank incorporated in France with a local branch registered with the South African Reserve Bank and registered as an external company in terms of the South African Companies Act, 2008 . BNPP is an authorised Financial Services Provider (FSP 44610) and subject to regulation by the Financial Services Board and South African Reserve Bank. It is also a licensed member of the Johannesburg Stock Exchange. BNPP does not expressly or by implication represent, recommend or propose that the information and/or financial products referred to in this report are appropriate to the particular investment objectives, financial situation or particular needs of the recipient. This document further does not constitute advice (whether financial, legal, tax or otherwise) as contemplated in the Financial Advisory and Intermediary Services Act, 2002. Australia: This material, and any information in related marketing presentations (the Material), is being distributed in Australia by BNPP ABN 23 000 000 117, a branch of BNPP 662 042 449 R.C.S., a licensed bank whose head office is in Paris, France. BNPP is licensed in Australia as a Foreign Approved Deposit-taking Institution by the Australian Prudential Regulation Authority (APRA) and delivers financial services to Wholesale clients under its Australian Financial Services Licence (AFSL) No. 238043 which is regulated by the Australian Securities & Investments Commission (ASIC).The Material is directed to Wholesale clients only and is not intended for Retail clients (as both terms are defined by the Corporations Act 2001, sections 761G and 761GA). The Material is subject to change without notice and BNPP is under no obligation to update the information or correct any inaccuracy that may appear at a later date. China: This document is being distributed in the People's Republic of China (“PRC”, excluding the Hong Kong or Macau Special Administrative Regions or Taiwan) by BNPP (China) Limited (“BNPP China”), a subsidiary of BNPP. BNPP China is a commercial bank licensed by the China Banking Regulatory Commission to carry on banking business in the PRC. Hong Kong - Branch: This document is prepared and distributed by BNP Paribas Hong Kong Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Hong Kong Branch is registered as a Licensed Bank under the Banking Ordinance and regulated by the Hong Kong Monetary Authority. BNP Paribas Hong Kong Branch is also a Registered Institution regulated by the Securities and Futures Commission for the conduct of Regulated Activity Types 1, 4, 6 and 9 under the Securities and Futures Ordinance. This document may not be circulated, distributed, reproduced or disclosed (in whole or in part and in any manner whatsoever) to any other person without the prior written consent of BNP Paribas Hong Kong Branch. Hong Kong - Securities: This document is intended only for the Professional Investors in Hong Kong. This document is prepared and distributed by BNPP Securities (Asia) Limited. BNPP Securities (Asia) Limited is a Licensed Corporation regulated by the Securities and Futures Commission for the conduct of Regulated Activity Types 1, 2, 4, and 6 under the Securities and Futures Ordinance. This document may not be circulated, distributed, reproduced or disclosed (in whole or in part and in any manner whatsoever) to any other person without the prior written consent of BNPP Securities (Asia) Limited. Some products or transactions described in this document may not be authorised in Hong Kong and may not be available to Hong Kong investors. India - Branch: BNPP India branch is licensed by Reserve Bank of India to carry on banking business in India and is regulated by the Banking Regulation Act 1949, Securities & Exchange Board of India Act 1992, and other related regulations issued by Government of India and regulatory bodies such as Reserve Bank of India, Securities and Exchange Board of India etc. from time to time. For the purpose of distribution in India this document is prepared for counterparties who have fair knowledge of risk associated with foreign exchange market, Institutional Investors & Counterparties, Expert Investors and for those clients and investors whose risk management policies are in place. India - Securities: In India, this document is being distributed by BNPP Securities India Pvt. Ltd. ("BNPPSIPL"), having its registered office at 5th floor, BNPP House, 1 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, INDIA (Tel. no. +91 22 3370 4000 / 6196 4000, Fax no. +91 22 6196 4363). BNPPSIPL is registered with the Securities and Exchange Board of India (“SEBI”) as a research analyst (Regn. No. INH000000792) and as a stockbroker in the Equities and the Futures & Options segments of National Stock Exchange of India Ltd. (“NSE”) and BSE Ltd. and in the Currency Derivatives segment of NSE (SEBI Regn. Nos.: INB/INF/NSF/NSE231474835, INB/INF011474831; CIN: U74920MH2008FTC182807; Website: www.bnpparibas.co.in). Indonesia: This document is being distributed by PT Bank BNPP Indonesia, whose registered office is Menara BCA - 35th Floor, Grand Indonesia, Jalan M.H Thamrin No.1,Jakarta 10310, Indonesia; Tel : +62 21 2358 6262; Fax: +62 21 2358 6098. PT Bank BNPP Indonesia is regulated by Bank of Indonesia. Details about the extent of our authorisation by Bank of Indonesia are available on request. This document is not directed at individuals or retail clients. Japan - Branch: This document is being distributed to Japanese based firms by BNPP Tokyo Branch, or by a subsidiary or affiliate of BNPP not registered as a financial instruments firm in Japan, only to Japan-based Institutional Investors and Professional Investors as defined by the Financial Instruments and Exchange Act of Japan. BNPP Tokyo Branch is a Registered Financial Institution, Kanto Finance Bureau-Kinsho-#98, and a member of the Japanese Bankers Association (JBA), the Japan Securities Dealers Association and the Financial Futures Association of Japan. BNPP Tokyo Branch accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japan-based firms by BNPP Tokyo Branch. Japan - Securities: This document is being distributed to Japanese based firms by BNPP Securities (Japan) Limited or by a subsidiary or affiliate of BNPP not registered as a financial instruments firm in Japan, to certain financial institutions defined by article 17-3, item 1 of the Financial Instruments and Exchange Act Enforcement Order. BNPP Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments and Exchange Act of Japan and a member of the Japan Securities Dealers Association, TypeⅡ Financial Instruments Firms Association and the Financial Futures Association of Japan. BNPP Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japan based firms by BNPP Securities (Japan) Limited. Some foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Act of Japan. If there is any mention of credit ratings in the document, it is a Japanese regulatory requirement to include a prescribed “explanatory note on non-registered credit rating”. The full text is contained in the separate document titled “Additional Disclaimer for Japan” (for both Branch and Securities).

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LEGAL NOTICE (5/6) Malaysia - BNPP Malaysia Berhad: (Company No. 918091-T) is incorporated in Malaysia under the Companies Act of Malaysia, 1965. It is a licensed institution under the Financial Services Act 2013 and is regulated by Bank Negara Malaysia. BNPP Capital (Malaysia) Sdn Bhd: (Company No. 247454-M) is incorporated in Malaysia under the Companies Act of Malaysia, 1965. It is a licensed institution under the Capital Markets and Services Act 2007 and is regulated by Securities Commission Malaysia. Malaysia Labuan - Branch: BNPP, a company registered under the laws of France [with company number 662 042 449 RCS PARIS / its registered office at [Paris] etc] (“BNPP” or “the Bank”), acting through its Labuan branch at Level 9 (D), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 F.T. Labuan, Malaysia. Philippines: This report is being distributed in the Philippines by BNPP Manila Branch, an Offshore Banking Unit (OBU) of BNPP whose head office is in Paris, France. BNPP Manila OBU is registered as an offshore banking unit under Presidential Decree No. 1034 (PD 1034), and regulated by the Bangko Sentral ng Pilipinas. This report is being distributed in the Philippines to qualified clients of OBUs as allowed under PD 1034, and is qualified in its entirety to the products and services allowed under PD 1034. Singapore - Securities: This document is distributed in Singapore by BNPP Securities (Singapore) Pte. Ltd. (“BNPPSSL”) only to Institutional Investors or Accredited Investors (as defined in the Securities and Futures Act (Chapter 289) of Singapore and the Financial Advisers Regulations (“FAR”), as amended from time to time). This document is not intended for investors in Singapore who are not Institutional Investors or Accredited Investors, and should not be passed on to any such persons. In relation to the distribution of this document to the intended recipients, BNPPSSL and its representatives are exempted under Regulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act (Chapter 110) of Singapore, regarding the disclosure of certain interests in, or certain interests in the acquisition or disposal of, securities referred to in this document. Some products or transactions described in this document may not be authorised in Singapore and may not be available to Singapore investors. Information in this document is for general circulation to the intended recipients only and is not a recommendation or investment advice to such recipients since it does not take into account the specific investment objectives, financial situation and the particular needs of any particular recipient (“Specific Requirements”). A recipient of this document should seek advice from the recipient’s own professional advisers regarding the suitability of the products or transactions (taking into account the recipient’s Specific Requirements) as well as the risks involved in such products or transactions before a commitment to purchase or enter into any product or transaction is made. Singapore - Branch: BNP Paribas, Singapore Branch is a licensed bank regulated by the Monetary Authority of Singapore. This document is not intended for investors in Singapore who are not Institutional Investors or Accredited Investors within the meaning of the Securities and Futures Act. Some products or transactions described in this document may not be authorised in Singapore and may not be available to Singapore investors. South Korea - Branch: BNPP Seoul Branch is regulated by the Financial Services Commission and Financial Supervisory Service for the conduct of its financial investment business in the Republic of Korea. This document does not constitute an offer to sell to or the solicitation of an offer to buy from any person any financial products where it is unlawful to make the offer or solicitation in South Korea. South Korea - Securities: BNPP Securities Korea is registered as a Licensed Financial Investment Business Entity under the FINANCIAL INVESTMENT BUSINESS AND CAPITAL MARKETS ACT and regulated by the Financial Supervisory Service and Financial Services Commission. This document is distributed by BNPP Securities Korea Co., Ltd. in Korea to Professional Investors only and is not intended for investors in Korea who are not Professional Investor within the meaning of the Article 9 (5) (professional investor) of the FINANCIAL INVESTMENT BUSINESS AND CAPITAL MARKETS ACT and should not be passed on to any such persons. Some products or transactions described in this document may not be authorised in Korea and may not be available to Korea investors. Information in this document is for general circulation to the intended recipients only and is not a recommendation or investment advice to recipients hereof since it does not take into account the specific investment objectives, financial situation and the particular needs of any particular recipient ("Specific Requirements"). A recipient of this document should seek advice from its/his own financial adviser regarding the suitability of the products or transactions (taking into account the recipient's Specific Requirements) as well as the risks involved in such products or transactions before a commitment to purchase or enter into any product or transaction is made. Taiwan - Branch: This report is being distributed in Taiwan by BNPP Taipei Branch, Taichung Branch, Kaohsiung Branch and/or Offshore Banking Unit, branches of BNPP and is regulated by the Financial Supervisory Commission, R.O.C under the Banking Act and Offshore Banking Act. This document is directed only at Taiwanese counterparties who are licensed or who have the capacities to purchase or transact in such products. Some products or transactions described in this document may not be authorised in Taiwan and may not be available to Taiwan investors. This document does not constitute an offer to sell to or the solicitation of an offer to buy from any person any financial products where it is unlawful to make the offer or solicitation in Taiwan. Information in this document is for general circulation to the intended recipients only and is not a recommendation or investment advice to recipients hereof since it does not take into account the specific investment objectives, financial situation and the particular needs of any particular recipient ("Specific Requirements"). A recipient of this document should seek advice from its/his own financial adviser regarding the suitability of the products or transactions (taking into account the recipient's Specific Requirements) as well as the risks involved in such products or transactions before a commitment to purchase or enter into any product or transaction is made. The material is subject to change without notice and BNPP is under no obligation to update the information or correct any inaccuracy that may appear at a later date (Applicable for the products distributed to non-Professional Institutional Investors). Taiwan - Securities: This document is being distributed in Taiwan to professional investors only. Such information is for your reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decision. Information on securities that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities. BNPP Securities (Taiwan) Co., Ltd. may not execute transactions for clients in these securities. This publication may not be distributed to the public media or quoted or used by the public media without the express written consent of BNPP. Thailand: BNPP Bangkok branch is regulated in Thailand by the Bank of Thailand and the Securities and Exchange Commission. This document does not constitute an offer to sell to or solicitation of an offer to buy from any person any financial products where it is unlawful to make the offer or solicitation in Thailand. Vietnam: This document is distributed in Viet Nam by BNPP Ho Chi Minh City Branch, registered in Viet Nam under No. 05/NH-GP. This publication is prepared for investors who have legal standing and is not intended for Private Customers in the territory of Viet Nam and should not be passed on to any such persons. It is directed only at Vietnamese counterparties who have the capacity and licence authorised by SBV to purchase from or transact with offshore counterparties. By accepting this document you agree to be bound by the foregoing limitations. Some or all of the information contained in this document may already have been published on https://globalmarkets.bnpparibas.com © BNPP (2018). All rights reserved.

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LEGAL NOTICE (6/6) IMPORTANT DISCLOSURES by producers and disseminators of investment recommendations for the purposes of the Market Abuse Regulation: Although the disclosures provided herein have been prepared on the basis of information we believe to be accurate, we do not guarantee the accuracy, completeness or reasonableness of any such disclosures. The disclosures provided herein have been prepared in good faith and are based on internal calculations, which may include, without limitation, rounding and approximations. BNPP and/or its affiliates may be a market maker or liquidity provider in financial instruments of the issuer mentioned in the recommendation. BNPP and/or its affiliates may provide such services as described in Sections A and B of Annex I of MiFID II (Directive 2014/65/EU), to the Issuer to which this investment recommendation relates. However, BNPP is unable to disclose specific relationships/agreements due to client confidentiality obligations. Section A and B services include A. Investment services and activities: (1) Reception and transmission of orders in relation to one or more financial instruments; (2) Execution of orders on behalf of clients; (3) Dealing on own account; (4) Portfolio management; (5) Investment advice; (6) Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis; (7) Placing of financial instruments without a firm commitment basis; (8) Operation of an MTF; and (9) Operation of an OTF. B. Ancillary services: (1) Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management and excluding maintaining securities accounts at the top tier level; (2) Granting credits or loans to an investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction; (3) Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings; (4) Foreign exchange services where these are connected to the provision of investment services; (5) Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments; (6) Services related to underwriting; and (7) Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 related to the underlying of the derivatives included under points (5), (6), (7) and (10) of Section C (detailing the MiFID II Financial Instruments) where these are connected to the provision of investment or ancillary services. BNPP and/or its affiliates do not, as a matter of policy, permit pre-arrangements with issuers to produce recommendations. BNPP and/or its affiliates as a matter of policy do not permit issuers to review or see unpublished recommendations. BNPP and/or its affiliates acknowledge the importance of conflicts of interest prevention and have established robust policies and procedures and maintain effective organisational structure to prevent and avoid conflicts of interest that could impair the objectivity of this recommendation including, but not limited to, information barriers, personal account dealing restrictions and management of inside information. BNPP and/or its affiliates understand the importance of protecting confidential information and maintain a “need to know” approach when dealing with any confidential information. Information barriers are a key arrangement we have in place in this regard. Such arrangements, along with embedded policies and procedures, provide that information held in the course of carrying on one part of its business to be withheld from and not to be used in the course of carrying on another part of its business. It is a way of managing conflicts of interest whereby the business of the bank is separated by physical and non-physical information barriers. The Control Room manages this information flow between different areas of the bank where confidential information including inside information and proprietary information is safeguarded. There is also a conflict clearance process before getting involved in a deal or transaction. In addition, there is a mitigation measure to manage conflicts of interest for each transaction with controls put in place to restrict the information flow, involvement of personnel and handling of client relations between each transaction in such a way that the different interests are appropriately protected. Gifts and Entertainment policy is to monitor physical gifts, benefits and invitation to events that is in line with the firm policy and Anti-Bribery regulations. BNPP maintains several policies with respect to conflicts of interest including our Personal Account Dealing and Outside Business Interests policies which sit alongside our general Conflicts of Interest Policy, along with several policies that the firm has in place to prevent and avoid conflicts of interest. The remuneration of the individual producer of the investment recommendation may be linked to trading or any other fees in relation to their global business line received by BNPP and/or affiliates. IMPORTANT DISCLOSURES by disseminators of investment recommendations for the purposes of the Market Abuse Regulation: The BNPP disseminator of the investment recommendation is identified above including information regarding the relevant competent authorities which regulate the disseminator. The name of the individual producer within BNPP or an affiliate and the legal entity the individual producer is associated with is identified above in this document. The date and time of the first dissemination of this investment recommendation by BNPP or an affiliate is addressed above. Where this investment recommendation is communicated by Bloomberg chat or by email by an individual within BNPP or an affiliate, the date and time of the dissemination by the relevant individual is contained in the communication by that individual disseminator. The disseminator and producer of the investment recommendations are part of the same group, i.e. the BNPP group. The relevant Market Abuse Regulation disclosures required to be made by producers and disseminators of investment recommendations are provided by the producer for and on behalf of the BNPP Group legal entities disseminating those recommendations and the same disclosures also apply to the disseminator. If an investment recommendation is disseminated by an individual within BNPP or an affiliate via Bloomberg chat or email, the disseminator’s job title is available in their Bloomberg profile or bio. If an investment recommendation is disseminated by an individual within BNPP or an affiliate via email, the individual disseminator’s job title is available in their email signature. For further details on the basis of recommendation specific disclosures available at this link (e.g. valuations or methodologies, and the underlying assumptions, used to evaluate financial instruments or issuers, interests or conflicts that could impair objectivity recommendations or to 12 month history of recommendations history) are available at https://globalmarkets.bnpparibas.com/gmportal/private/globalTradeIdea. If you are unable to access the website please contact your BNPP representative for a copy of this document.

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