IGBC index lifted by Ecopetrol; peso weakens

Colombia’s benchmark IGBC stock index gained 0.21% to close at 11,621.04 points, led by state-controlled oil firm Ecopetrol, which rose 1.6% to COP2,540 ($1.32) on speculation that its dividend will be higher than investors had expected when it is announced in March.

“There are rumors in the market that the dividend might not be as low as the market was predicting,” said Daniel Velandia, an analyst with local brokerage Ultrabursatiles. “There is no specific news, but in this market these types of rumors carry a lot of weight.”

The breaching of the COP2,500 resistance level had caused some technical buying, Velandia added.

Ecopetrol is by far Colombia’s largest company, with a 20.85% weighting on the IGBC index.

The market is likely to remain stable in a 11,000-12,000 point range in the short-term, as pension funds are close the upper limit of 40% that Colombia’s market regulator allows them to invest in stocks, Velandia said.

“Pension funds are close to the limits of what they can invest in shares,” Velandia said. “These are major players who drove the market up so much in 2009. They don’t have so much room to maneuver, and private investors don’t have the same weight,” Velandia added.

The Colombian peso weakened to COP1,923 against the dollar, from COP1,919 on Monday, as poor business confidence data from Germany caused the U.S. currency to gain ground.

The yield on Colombia’s benchmark peso-denominated bond maturing in 2020 fell to 9.125%, from 9.150% at Monday’s close. (Matthew Bristow / Dow Jones)

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