The currency and the Colombian Stock Market were devalued on Tuesday as a reaction to the victory of the leftist Gustavo Petro in the presidential elections of the weekend that accentuated the fears of the investors on some of its proposals.
The peso ended with a drop of 3% to 4,022.50 units per dollar in a session in which it fell as much as 5% earlier, its biggest intraday percentage decline since September 2008.
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Colombian markets were closed on Monday for a national religious holiday.
In the bag, the MSCI COLCAP stock index ended with a drop of 3.82% to 1,398.42 points, although during the day it fell more than 5%.
The agents remain attentive to the appointments made by Petro in his team of ministers.
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The president-elect mentioned in the campaign the names of some economists considered moderate, including former ministers and a former central banker, as possible candidates for finance minister.
“The recent comments of the president-elect pointed to moderate and orthodox macro policy options for the key post of finance minister. Still, if such a scenario were to materialize, we would not expect it to dispel uncertainties about the management of Colombia’s public finances and external balance,” Morgan Stanley said in a note on Tuesday.
“Recent comments from the president-elect pointed to moderate and orthodox macro policy options for the key post of finance minister. Still, if such a scenario were to materialize, we would not expect it to dispel uncertainties about the management of Colombia’s public finances and external balance,” Morgan Stanley said in a note on Tuesday.
The biggest drop in the local stock market occurred in the stock of the oil company Ecopetrol, which plummeted 11.92% to 2,431 pesos, amid uncertainty over some of Petro’s proposals, such as suspending the signing of new contracts. hydrocarbon exploration, ban fracking and his speech against the extractive industry.
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“In the short term, we expect the (Petro) administration to seek to broaden its coalition and not foresee disruptive policy proposals. When it comes to risks, the oil sector and the pension system are likely to be subject to more uncertainty,” added Morgan Stanley.
Spreads on Colombian government debt against US Treasuries increased to 411 basis points as measured by JPMorgan’s EMBIG-D index, the highest since when it touched 419 basis points on June 14 and against a close of 383 basis points on Friday.
“Uncertainty on the economic front is the key challenge Petro is likely to face in the coming days. Investors are likely to have to deal with high oil prices and their policies,” Citi opined.
Meanwhile, the prices of dollar-denominated bonds fell from 0.36 cents per dollar due in 2023 to about 3.5 cents per bond due in 2033.
Bonds due in 2051 and 2061 fell 1 cent and 1.9 cents, respectively. The bonds have a yield of between 4.2% and 7.9% on all maturities.
In the local market, TES domestic debt securities maturing in March 2031 were devalued at a yield of 11.975%, from Friday’s close of 11.29%.