Colombian news summary
An $81.8-trillion national budget approved by Congress. Building permits grew by 11.3% in August. Retail sales increased 12.7%. Manufactures production rose 4,4%. Summit on revaluation, EPM acquires Guatemala's EEG. Canacol doubled its oil reserves. Oct 19 - 22.
- International rating agency Fitch Ratings, revised Ecopetrol’s outlook from stable to positive, leaving unchanged the ratings for long-term debt in foreign currency (BB+) as well as the one for long-term in debt local currency (BBB-). Consequently, the oil-company’s stock price gained 3.14% on Tuesday and registered a closing price of COP$4,270.00, trading approximately COP$79,087.04 million.
According to the report from the rating agency, the decision came in as a result of Colombia’s outlook revision last week. Additionally, among the decisive points taken into consideration by the agency were the company’s solid financial profile, production increases and adequate reserves levels. Although the company’s growth strategies and capital investments are considered aggressive, consistency between its financial and credit profile and the existing rating is expected.
- The National Administrative Department of Statistics (Dane) published positive results for Colombia’s retail and manufacturing sectors in August. Retail sales increased 12.7% y/y in real terms, and manufactured production rose 4.4% y/y.
-Congress approved on Wednesday a COP147,3-trillion national budget for fiscal year 2011 ($81.8 billion). A final revision of the bill reassigned approximately COP3.1 trillion to housing, infrastructure, education, agriculture, mining, science and technology. Additionally, resources assigned to public investment increased 16.3% (COP28.7 trillion) from current fiscal year, aside from COP21.2 trillion for education and COP35.3 trillion for public debt payments.
-Construction in Colombia showed good progress. National statistics office Dane reported an 11.3% y/y increase in area authorized by building permits in August. Moreover, square meters approved for housing registered a hefty 25.6% increase compared to August 2009.
- Colombia’s Stock Market General Index (IGBC) gained approximately 0,29%. Other indices showed the same upward trend. Colombia’s Stock Market Capitalization Index (COLCAP) rose 0,15%, and Colombia’s Stock Market Liquidity Index (COL20) increased and 0,01%.
- On Thursday morning, President Juan Manuel Santos met members of the central bank’s board of directors and the national economic team, to analyze the tools available to control the appreciation of the Colombian peso. No conclusions were reached and no decisions were made. The meeting was more a brainstorming session in which the team gathered information on the ideas being considered by the others.
Nevertheless Dinero.com found that ideas such as a massive intervention by the Central Bank or a control on the inflow of short term funds, were tacitly discarded, at least if conditions remain as they are today.
The group also touched on the recent price increase in the local stock market, which is increasingly being felt in Colombia as a bubble.
- Empresas Públicas de Medellín (EPM) acquired Empresa Eléctrica de Guatemala for a reported $605 million. This is the largest power distribution company in central America. “For the EPM Group this investment represents a vital step towards its internationalization strategy and growth, as well as for its power distribution, transmission and commercialization business”, EPM’s CEO Federico Restrepo said on Thursday. This step enables EPM reach 66% of its international MEGA, which represents external income for $1.200 million on 2015.
- The Colombian Stock Market General Index (IGBC) closed this week approximately 3.91%, above last Friday’s closing levels and increased 1.27% during today’s trading day. Both COLCAP and COL20 gained 1,53% and 0,92%, respectively. Moreover, the most traded stock was Ecopetrol (COP69.4 billion), which had a positive variation of 1.64% and a closing price COP4.340. Additionally, the Canadian oil company Canacol Energy (CNEC) gained 9.54% to COP3,215, representing the highest appreciation on Colombia’s Stock Market and Pacific Rubiales (PREC) stood out as the third most traded company with COP42,8 billion.
- Ecopetrol and Canacol Energy published interesting news, which resulted in the positive performance of their stocks. Ecopetrol approved the commerciality of the Casabe Sur field (Antioquia) after confirming its potential through tests that show a production estimate of 5,500 bbl/day on 2012. Meanwhile, Canacol Energy announced on Thursday, a 100% increase in its tested reserves from 2.1 million barrels in 2009 to 4.2 million barrels in 2010.