On Tuesday, June 21, two days after the victory of Gustavo Petro in the Colombian presidential elections, the markets registered a lot of movement.
(See: This is how the Colombian peso and other Latin currencies did against the dollar).
The dollar, for example, it rose more than 100 pesos and closed at an average trading price of $4,026.50.
Regarding the actions in the Colombian Stock Exchange (BVC), several of the most important ones went down: Bancolombia, Suramericana, Cementos Argos, Bancolombia, Ecopetrol. Precisely, this last company even saw losses in Wall St., in New York (USA).
and her own BVC, at the end of the day, registered a general fall of 3.28%.
So, what is the reason for this situation and what will come for the future of the markets.
(See: Inflation would continue to rise and would reach 9.56%, according to analysts).
Jeisson Balaguera, executive director for Values AAA, commented that the current activity is tied to the elections won by Petro, but it’s not the only thing.
“To this we must add that the dollar has an upward trend since the Federal Reserve (Fed) of the United States has been increasing the participation of interest rates and thus the price rises, only that the political phenomenon accelerated that growth”, Balaguera clarified.
He also said that we must prepare for major bullish swings That could last a week or two.
“Much money in pesos will be converted into dollars: there will be more demand for dollars and the price will rise. You have to wait two weeks to see the clear trend that will be marked”, he complemented, while saying that the announcements of the new government on policies that impact the dollar will be important.
Juan Eduardo Nates, senior foreign exchange associate at Credicorp Capital, He remained along the same lines and said that the volatility of the dollar will be felt every time Petro makes announcements and tells how it will execute its proposals, especially pensions and tax reform.
(See: Sustain GDP growth, the challenge of the new government).
Gustavo Petro has received congratulations from several countries.
Cristian Segura, analyst at Values AAA, explained that share prices intrinsically depend on the current valuation of the company and that in the case of Ecopetrol investors value the company for different items, as future projections in income, costs, profits.
“As there is uncertainty about whether new oil exploration will stop, this causes projections to decrease and, therefore, the value of the share in the market. If Petro’s proposal to stop hydrocarbon exploration is confirmed and there is no clarity on how oil revenues will be replaced, the market will value the stock below what it is“, said.
(See: Contribute and improve the pension system: message from Asonfondos to Petro).
Regarding the other actions that fell, such as those of Suramericana, Cementos Argos and Bancolombia, Balaguera stated that it is a phenomenon “short-term in which there is uncertainty in the market and will continue like this for a few weeks”.
As in the dollar, the expert added, “It will depend on the information that the new government transmits, but we believe that the markets will stabilize: it is only a moment of financial panic, but we believe that it will recover”.
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