As the Uribe era comes to an end, history will judge whether or not his time in power radically changed the future of our nation. However, it is indisputable that the Colombian stock market and its investors will be eternally grateful for his work as president.
During the lost decade of 1993-2002 in which Colombia almost became a failed state, thanks to the ineptitude of the then-presidents, the volatility of the stock market was high. There were a couple of nice rallies that rapidly faded as the relationship with the U.S. deteriorated during Samper’s administration, and the Caguan dialogues with the FARC failed during Pastrana’s.
As the market collapsed, Uribe surged from nowhere to become the head of state. The market’s first reaction was worry, as investors expected the conflict would get worse with the new security policies of the recently elected president. The stock market dropped to its lowest levels in more than 20 years and the Colombian peso reached the 3,000 to the dollar threshold.
But the first perception of the market was proven wrong.
Since early 2003, the major Colombian index, IGBC, has risen 1,100% as investor confidence soared, based on Uribe´s business-friendly policies that boosted corporate profits and expansion as well as foreign investment.
Since 2002, the profits of the major Colombian companies have grown exponentially due to the economic growth the country has experienced in the last few years. For instance, Bancolombia, the biggest Colombian bank, has seen its net profits rise almost 600% from $1.5 billion in 2002 to $10 billion in 2009. This should be taken as a representative example of much of the services sector.
Furthermore, the process of consolidation and expansion of Colombian companies has accelerated during the last few years with headline-making acquisitions of foreign companies by local Colombian firms, such as CTEEP of Brazil by ISA, the holdings of Holcim in the Caribe by Cemargos, and the international expansion in Central America by the Grupo Nacional de Chocolates.
And investors have really had something to cheer about for three reasons.
First, the performance of the Colombian stock market, during the Uribe administration, has been stellar. Trading volumes have grown over 700% since 2002 and international recognized sovereign and hedge funds such a Abu Dhabi Investments have actively invested in the local market.
Second, of the ten major share issues of the last eight years, nine have been successful, with 100% or more return on investments. Share issues of public companies such as Exito, Grupo Sura, Colinversiones as well as issues as of state companies such as Ecopetrol, ISA e Isagen have exceeded the expectations of the most optimistic.
And third, the general public has had the chance to benefit from the market through the share issue of Ecopetrol, where the government played an active role compelling Colombians to invest in the Colombia’s flagship company.
For all that, Uribe deserves the recognition and gratitude of the market because he did not just give hope to Colombians, but helped those who believed to put a few extra bucks in their pockets.