Dec. 3 (Bloomberg) -- Colombia’s IGBC equity index rose to a record, becoming the first benchmark gauge among the world’s largest markets to surpass an all-time high this year, as interest-rate cuts and rising commodity prices lured investors to the nation’s stocks.
The IGBC advanced 1.3 percent today to 11,558.72, topping the closing peak of 11,438.88 reached in November 2007. Only indexes in Sri Lanka and Tunisia, whose market values are less than 10 percent of Colombia’s $126.8 billion, have also exceeded records following the global financial crisis, according to data compiled by Bloomberg.
Bancolombia SA, the nation’s biggest bank, and Cia. Colombiana de Inversiones SA, an electricity holding company known as Colinversiones, helped the IGBC rally 53 percent this year as the central bank cut interest rates to a record low of 3.5 percent. Ecopetrol SA, the state-controlled oil company that holds the biggest weight in the index, gained as crude climbed 72 percent.
“There’s an excess of liquidity because the fixed-income market has lost its appeal as rates are low,” said Estefania Leon, senior analyst at brokerage Correval SA in Bogota. “There’s no offering of new stocks and high demand for equity, so investors have nowhere else to put their money.”
Colombia’s market recovered losses after falling less than other countries last year amid the global crisis that spurred $1.7 trillion in losses and writedowns from financial companies around the world. The IGBC slid 29 percent in 2008, compared with a 54 percent plunge in the MSCI Emerging Markets Index.
Rally This Year
The MSCI gauge of 22 countries has added 74 percent so far this year on speculation developing nations will lead the world economy out of a recession.
“As calm returns globally, so does the appetite for emerging markets, which are more profitable than the U.S. and Europe,” said Camilo Forero, senior analyst at Bogota brokerage Cia. de Profesionales de Bolsa.
Bancolombia, which has gained 73 percent in 2009, weathered a slowdown in Colombia’s economy well, Forero said. Defaults remained steady and interest-rate cuts boosted margins, he said.
Colinversiones rose the most in the IGBC this year, surging 150 percent, while Interconexion Electrica SA, Latin America’s biggest power-line operator, rose 70 percent.
“The whole world has its eyes on the energy sector here,” Forero said.
Argos, Mineros
Inversiones Argos SA, a Medellin-based holding company, rose 96 percent as it focused its portfolio in energy, lifting its investment in Colinversiones and preparing a bid for a stake in electricity firm Empresa de Energia del Pacifico SA.
Mineros SA, Colombia’s biggest gold-mining company, jumped 142 percent for the second-largest gain on the index. Gold climbed to a record as a slump in the U.S. dollar fuels demand for the metal as an alternative asset.
Ecopetrol, which has a 30 percent weight in the index, climbed 29 percent this year.
There is a seasonal factor in equities’ gain, according to Forero. The IGBC has added 9.7 percent in the past month.
“In December there’s higher demand for stocks because of tax benefits,” he said. Assets in equities avoid some taxes under Colombian law.
Increased trading may increase Colombia’s appeal for international investors, said Johanna Castro, head equity analyst at Corredores Asociados SA, a Bogota-based brokerage.
Investors traded 3.5 trillion pesos ($1.76 billion) in shares in October, the highest volume on record in months where there was no initial public offering, according to Bolsa de Valores de Colombia SA, the country’s main exchange.
BVC President Juan Pablo Cordoba said in September he expects an IPO revival as the global recession eases. Biomax Biocombustibles SA, a Bogota-based fuel distributor, plans a public offering in March or April, according to Chief Executive Officer Ramiro Sanchez.
Source: bloomberg.com/
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