Colombian stocks declined Friday as investors continued to sell shares of Banco Davivienda SA on concerns over the bank’s planned purchase of HSBC Holdings PLC’s businesses in Central America.
The Colcap index, a grouping of blue-chip stocks in the Colombian Stock Exchange, fell 0.34% to end at 1,595.77 points.
Davivienda shares fell 2.4% to 19,520 pesos ($10.71) and have fallen nearly 6% since the bank announced Tuesday that it plans to pay $801 million for HSBC’s assets in Costa Rica, El Salvador and Honduras. Analysts at Celfin Capital questioned the wisdom of the purchase, noting that in Central America the “economies are small and not exactly growing at a prolific rate.”
Meanwhile, the Colombian peso closed at COP1,808.20 to the dollar, its strongest closing level in 20 weeks and slightly firmer from COP1,811.80 a day earlier. The peso is more than 7% stronger against the dollar this year, making it one of the fastest-rising currencies in the world.
Colombia’s central bank meets Monday to discuss monetary policy, and exporters are urging the bank to announce an intervention plan in which it would buy dollars in the forex market to bring down the value of the peso. A strong peso makes Colombian exporters’ products more expensive abroad.
Most analysts think the bank will hold off on any new dollar-buying program because they say the bank is concerned financial problems in Europe could escalate, causing the peso to naturally weaken against the greenback.
The yield on Colombia’s peso-denominated bond due July 2024 closed at 7.332%, after beginning the session at 7.268%.