Colombian stocks suffered a sharp decline Monday, dragged lower by concerns over the strength of the global economy and a drop in crude prices that hurt some of the country’s key oil stocks.
The COLCAP index, which encompasses the country’s blue-chip stocks, fell 3.31% to end the session at 1535.48 points. The index is down 15.8% so far this year.
Oil stocks, which have a decisive weighing in the index, led the decline as crude prices declined on fears of a global economic slowdown. Light, sweet crude for September delivery settled down $5.57, or 6.4%, at $81.31 a barrel on the New York Mercantile Exchange, its lowest finish since Nov. 23.
Pacific Rubiales Energy, a Toronto-based firm which operates Colombia’s most important oil field, plunged 7.9% to end the session at COP42,060.
Ecopetrol SA, Colombia’s state-run oil company, declined 1.78% to COP3,595. The recent decline in the company’s shares puts them below the COP3,700 level set by the company in a COP2.5 trillion secondary offering that is slated to end on Aug. 17. The company is selling a 1.67% stake at the local exchange in a bid to raise funds to finance part of its capital investments this year.
It is unclear if the decline in the company’s share price will mean that the company is unable to sell the full 1.67% stake, said Juan Camilo Dominguez, an analyst with brokerage firm Corredores Asociados. “There’s always a risk, but it’s important to wait for the market to calm down,” he said.
A spokesman for Ecopetrol declined to comment on how the decline in share prices could affect the offering. Until Aug. 4, the company had sold COP1 trillion of the COP2.5 trillion offering, the spokesman said.
The Colombian peso ended Monday’s trading session with a strong retreat against the dollar, spawned by a sell-off in riskier emerging market assets as investors seek safety after the U.S. credit rating was downgraded.
The peso closed at COP1,815.50 to the dollar, a 1.4% retreat from Friday’s close of COP1,789, according to central bank data. The peso is now trading at its weakest level since May 26.
The yield on Colombia’s peso-denominated bond due in July 2024 closed at 7.653% after starting the session at 7.643%.