Shares in Colombia’s hydropower giant, Isagen, made their biggest daily gain since 2009 on the morning following Sunday’s presidential elections, reported the US-based Bloomberg newswire.
The reelection of President Juan Manuel Santos would seem to confirm the Colombian government’s intentions to sell its 57.6% ownership stake in the company, a move that had been strongly opposed by presidential rival Oscar Ivan Zuluaga.
As a result, Isagen share prices surged 8.3% Monday morning, in what was the largest percentage increase for any given day since 2009. The jump places the energy giant at the top of the COLCAP index of Colombia’s 20 most secure firms, whose share prices rose by a collective 0.4% on the same day.
The incumbent president had proposed the sale of the government’s majority stake in the hydropower giant to fund the country’s $25 billion ‘Fourth Generation’ road construction plan, according to the Reuters newswire.
A large number of expectant investors apparently jumped at the opportunity to gain a stake in the company before it is handed over to the private sector entirely.
Share prices follow election results trend
The pattern of Isagen share values has reflected election results in recent months. Bloomberg reported that shares saw their largest drop in four months on the Monday after Zuluaga took the lead in the first round of presidential elections on May 25.
Speaking to a local radio station on the Monday following the election, Zuluaga said: “I think that the sale of Isagen would be a mistake for the country because if there’s one thing Colombia needs, it’s competitive energy.”
The sale of the state’s Isagen shares was also opposed by ex-President Alvaro Uribe, a senator-elect and the leader of Zuluaga’s Democratic Center (Centro Democratico) party, whose appeal to block the sale was eventually rejected by a Colombian court in 2013, according to Bloomberg.
Sale continues with reelection
Sunday’s presidential runoff saw incumbent U Party (Partido de la U) candidate Juan Manuel Santos secure his second term with almost 51% of the Colombian vote, a convincing win over Zuluaga, who came in with 45%.
Santos’ reelection can be taken as “reaffirmation that the sale process will continue,” according to Jaime Pedroza, an analyst at Credicorp Capital’s Colombia unit, with the funds generated to be invested into the proposed infrastructure construction plan.
Roads are seen as Colombia’s main competitiveness bottleneck, with the country owning under 600 miles of divided highways to carry 70% of the country’s exports — amounting to 170 million tons — between its five main ports, situated on both the Atlantic and Pacific oceans. In contrast, Latin American competitor Chile has more than 900 miles to connect its 32 ports on the Pacific.