Colombian bonds and shares plummeted Monday as investors massively sold on fears a world recession is looming.
The benchmark stock index fell 4.9% to 8,761.49 points, its lowest
level since July 22, when the index closed at 8,761.32 points.
“There is a correlation with world markets that led investors to sell
here,” said Paula Delgadillo, a market analyst, with local brokerage
Valores Bancolombia.
The IGBC followed the Dow Jones Industrial Average, which fell below
10,000 points for the first time in four years. In Brazil, the Stock
Exchange had to suspend trading twice after the Bovespa index plunged.
The Bovespa was 15% down at one point.
The most-traded shares were from state-owned oil company Ecopetrol SA, which fell 5% to 2,455 Colombian pesos ($1.09).
On the debt market, the yield on the benchmark peso-denominated
government bonds maturing in 2020 rose to 12.088% from 11.617%. The
bond yields move inversely to prices.
“Everybody’s just nervous,” said Arnoldo Casas, a bond trader with
local brokerage Profesionales de Bolsa SA. “Everything is falling and
the traditional way to hedge in Colombia is buying dollars.”
As a result of the sell-off, the Colombian peso weakened to COP2,255.55
to the dollar from COP2,165 on Friday. The peso hadn’t closed that
weakly since Jan. 30, 2007.
Casas said it is difficult to forecast how deep prices can fall. “I wouldn’t recommend to buy just yet,” he said. (Dow Jones)