Colombian stock market, the worst performing in America in 2023

Since mid-January, the main index of the Colombian Stock Exchangehe Colcapdid not register a value as low as the current one (1,158.68 points) which makes it the worst performing among the main American stock markets, with a fall of 9.4%.

Said value, with some upward variations, has been repeating itself since July 2009, which is why the Colombian stock market has not shown consistency and, on the other hand, is losing more liquidity, depth and issuers of variable income securities.

(‘More actions against informality would be an achievement of labor’).

Added to this are structural factors of an international economic and geopolitical order and internal elements such as political uncertainty in the last year.

For Rodrigo Galarza, lawyer expert in capital markets, the stock market has lost liquidity and depth as “As a consequence of the takeover bids (OPA) sponsored by the Gilinski Group”.

(The NY stock market closes in the red and the Dow Jones loses 0.8%).

This brought, according to the expert, that those who sold their titles “they moved towards fixed income assets that in 2022 achieved returns of 18% or more in CDTs”. In addition, international investors, due to the lack of depth, sold their shares as they perceived a high liquidity risk, he assures.

Added to this, he says that although difficult to measure objectively, “the political environment and the economic agenda of the government deteriorate the investment climate”.

(Colombia falls in the World Bank’s ‘ranking’ of logistics performance).

And at the moment there are no great expectations that the situation will change “while macro conditions are unfavorable (rising cost of debt and capital due to inflation, interest rates and tax levels)“, says.

Galarza considers that even if the “macro conditions improve (which also implies less hostility from the government towards businessmen), it is urgent to return to the path of institutional reform of the capital market”.

(Mining, waiting for clear signals to advance in projects).

And he warns that it is essential to retake the recommendations of the 2019 Capital Market Mission sooner; well “there are keys to their development and growth”.

For his part, Ana Vera, Chief Economist at In On Capital, He says that Colombia for investors in the world stands out for the good dividends offered by its companies, which is very attractive from the point of view of agents seeking permanent flows in their investments.

(Milk and coffee, sectors with the highest risk due to Nevado activity).

However, the lack of liquidity and little profitability over the prices of the firms makes Colombian shares unattractive to those who seek higher valuations through prices. and this is due to the uncertainty that exists regarding what is coming for investments with the reforms in process, he assures.

The integration of the Colombian, Chilean and Peruvian stock exchanges will give rise to an expanded platform for issuers and investors, but “It is not the solution to the problems that Colombian issuers havesays Galarza. “Colombia will participate in that market with what it has, which is little”, he assures.

(88% of high-income households have no appetite to buy a home).

It warns that “if the Government wants to reindustrialize the country, it needs to create the conditions so that Colombian companies can capture, through the bond and stock markets, the flows originated in an expanded market. Without these flows, without a robust and thriving local market, there is no future”.

Ana Vera says that for now it is difficult to see in the long term, until the scope of the reforms is clear and regarding the integration of the stock markets, she believes that it will not help due to the lack of appetite for Colombian companies.

ECONOMY AND BUSINESS