Oil and mining stocks suffer after Petro win

Although this Monday was a rest day for the Colombian financial and stock market, as well as in the United States, after the day of the presidential run-off in which the winner was Gustavo PetroYesterday’s previous moves have already begun to mark the signs of uncertainty that many analysts predict for stock markets, especially those in the oil sector, and also for the dollar.

The first bell rang this Monday on the Toronto Stock Exchange, where the shares of major mining and energy companies operating in Colombia are listed, such as Canacol Energy, an oil company focused on the gas sector, Mineros SA and the the gold company GCM Mining, among others, whose securities have depreciated.

(Also read: The future of relations with the United States, Venezuela and Nicaragua with Petro)

In the case of the first two, the drop reached this Monday morning 8.58% for Canacol Energy and 9.68% for Mineros, in clear reaction to the proposals of the elected president, which would affect the mining and energy sector, according to Juan David Ballén , director of analysis and strategy of the brokerage.

At the close of trading on this stock market, the stock that fell the most was Mineros, which fell 7.5% to 0.86 Canadian dollars per share, while Canacol Energy recorded a daily depreciation of 3.7 %, closing at 2.58 Canadian dollars.

According to the analyst, this behavior marks a clear sign of the behavior that the action of Ecopetrol would have on Tuesday, which on Monday was not traded on the local market nor its ADR (American Depositary Receipt) on the New York Stock Exchange. York.

(Also: Sharp drop in shares of oil and mining companies operating in Colombia)

For this reason, as well as at the end of the first presidential round, when candidate Rodolfo Hernández won second place in the vote and the share of the majority state oil company increased by 10%, Ballén believes that after the Petro victory, the setback should be at least at this level.

And if this reduction occurs, a red day is expected on the entire Colombian stock market, represented by the MSCI Colcap indicator, due to the weight that the oil company has in the volume of daily transactions.

And it is that, according to analysts, the result of the presidential election is beginning to generate more uncertainty among investors, since it is not known whether these announcements will materialize and in what way.

In this respect, for Credicorp Capital, although the proposal not to grant new exploration permits can be carried out relatively easily through the National Hydrocarbons Agency (ANH), the main question that remains is whether Petro’s initiative is fully credible and how it would ultimately come to fruition.

The above, considering that oil accounts for about 35% of total exports, has averaged about 0.9% of GDP in tax revenue for the central government in recent years and is a key revenue source for the regions. through royalties.

(You might be interested in: The dilemmas that Rodolfo Hernández has now)

the dollar will rise further

Meanwhile, and also contrary to what was seen in the price of the dollar after the first presidential round, it is expected that in the coming days the currency will show a marked bullish pace, rising up to 400 pesos in the next days.

This Monday alone, the price of the dollar the next day in Colombia, a modality between operators in which the one who buys must pay for the operation the next working day, operated on the rise, increasing by 4% around noon, for an increase of 159 pesos to 4,062 pesos, while the price of oil was stable.

(Read also: Gustavo Petro: businessmen close ranks around working for the country)

According to Casa de Bolsa’s Ballén, the magnitude of the dollar’s rise is similar to the drop it exhibited when Rodolfo Hernández went to the second round, as he was greeted with more optimism by the market. than Gustavo Petro.

And precisely for this reason, he predicts that at least today the currency would rise by the same 150 pesos that it fell at the end of the first presidential round.

For its part, Credicorp Capital estimates that the rate of 10-year Treasury Bonds (TES) will rise between 70 and 100 basis points initially and that the exchange rate will do so by around 100 pesos.

In the case of the stock market, the company predicts that the initial decline in the benchmark could be around 7% and 10%, but in the following days the behavior will depend on signals that the new government and a additional pressure cannot be ruled out.

(Also: Eln announces ‘willingness’ to restart peace process with Petro)

This Monday, the Minister of Finance, José Manuel Restrepo, in a dialogue with RCN Radio, stressed that talking about variations in the price of the dollar on a holiday was a “mistake”, since the markets were closed. “Tomorrow (today) we will know if there are variations.”

A little more peace of mind is to be expected once the new owner of said wallet is known.