Colombian stocks ended sharply lower Thursday, a fitting end to a year in which the bourse’s benchmark stock index declined during each and every quarter.
The Colcap index, considered the benchmark for the Colombian Stock Exchange, fell Thursday 1.1% to end at 1,571.55 points. This was the final trading session of 2011, as Friday is a holiday in Colombia.
Thursday’s losses were centered on Colombia’s oil sector, as local companies’ share prices declined despite higher global prices for crude oil. State-controlled Ecopetrol, Colombia’s largest oil company, fell 1.8% to COP4,215, while Pacific Rubiales, a Toronto-based firm that is Colombia’s top private producer, fell 0.5% to COP35,500.
Also falling sharply Thursday was Colombia’s largest financial holding firm Grupo de Inversiones Suramericana, whose shares declined 2.7% to COP31,100.
Earlier in the day, Dutch financial-services firm ING Groep NV said it completed the sale of its Latin American pensions and life-insurance operations to Grupo Sura. The deal was priced at around $3.5 billion and will give Grupo Sura a strong presence in Chile, Mexico, Peru and Uruguay, and will bolster its presence in Colombia.
Looking back on the year in Colombian stocks, analysts note that the steady decline in share prices stands in sharp contrast to an otherwise strong year for the Colombian economy. Gross domestic product growth is likely to be nearly 6% this year amid a boom in the mining and oil sectors and healthy consumer spending, especially in the housing and automobile sectors.
Also, the world’s top credit-ratings companies rewarded Colombian bonds with investment-grade status this year, a reflection of the economic improvements in the country and the government’s success in reducing the impact of a long-running guerrilla war.
Analysts say the 14% drop in Colombian stocks this year was mostly due to the fact that prices had perhaps been driven too high in 2010, on expectations of a solid 2011. Colombian stocks gained 33% last year.
For 2012, the performance in Colombian stocks is likely to be determined largely by global factors. Commodities, and especially oil, play a huge role in the direction of the Colombian Stock Exchange. If prices remain near $100 for a barrel of crude, analysts say Colombian stocks are likely to rebound from this year’s losses.
The Colombian peso closed marginally stronger Thursday at COP1,938.38 to the dollar from COP1,939.50 a day earlier. The peso ended the year a slight 0.9% weaker from where it ended 2010.
Colombia’s currency faced strengthening pressures for the first part of the year, but when the global financial crisis began and Europe’s debt problems started grabbing headlines, the peso’s gains were reversed, allowing it to end the year near to where it began.
The yield on Colombia’s peso-denominated bond due July 2024 closed at 7.600% Thursday, after beginning the session at 7.635%.