The Colombian benchmark IGBC stock index Wednesday rose to end at its highest level in two years, approaching its all-time record.
The stock index gained 0.4% on Wednesday to 11423.48 points, the highest level since November 2007, when it hit its all-time record of 11438.88 points. The Colcap index, which includes the largest companies by market capitalization, rose 0.2% to 1337.22 points.
“People are buying stocks because interest rates are too low in Colombia,” Arnoldo Casas, a market analyst with local brokerage Profesionales de Bolsa SA, said. “But they don’t pay attention to the real situation of the companies, I don’t think the increase is justified.”
Casas doesn’t expect the IGBC to rise much in the coming weeks and he expects a decline in January when a lot of people will sell to pocket recent gains.
Shares of state-controlled oil company Ecopetrol SA rose 0.6% to COP2,560 (US$1.28), while preferred shares of Bancolombia SA rose 2% to COP22,400. A Colombian court froze some assets of Bancolombia as part of a lawsuit related to the merger between Banco Industrial Colombiano SA and Banco de Colombia SA more than a decade ago.
“Investors consider that the bank will fix those problems and didn’t pay much attention,” Casas said.
The Colombian peso weakened to COP1,992.61 to the dollar on Wednesday from COP1,989.7 on Tuesday.
On the debt market, the yield on the benchmark government peso-denominated bond maturing in 2020 rose to 7.868% from 7.860% on Tuesday.