What Jumps Out: Tough Moments
The weekend financial press as per usual in Colombia has very little to recommend it, that is if you didn’t want to know ‘The most liked AirBnB’s on the planet’ ‘The Value of Recently Destroyed Art’ & ‘How Much it Costs to Kit Out a Home Gym’ – really the mainstream press come up very short over the weekend.
Here is what they might have spent their time discussing.
Finance Minister Ocampo (the adult in the room) on Friday was again discussing the ‘immense’ opportunity that Venezuela represents for the Colombian economy and how it will help in 2023. Also, that there may well be gas imports this year. That is wholly logical on both points. There is pent up demand in Venezuela for many goods that Colombia produces and to not import at least some cut price natural gas would be foolhardy. Nonetheless, a trustworthy payment system has to be built and whilst cheap gas is very welcome – it can’t get to  Nord Stream proportions.
Perhaps the press could also once again ask the question as to why the Central Bank will sit down this coming Friday at one of their four ‘non-decision’ meetings? At a time when sensitivities over inflation and interest rates are so high, it seems (to me at least) illogical for the committee to not be holding a full-blooded meeting, complete with a decision, vote and press conference regarding their latest thoughts.
The COLCAP is creaking. It closed at 1210 on Friday – a support level last seen in December and March of 2022 – there is gap below. YTD the COLCAP is down 6.9% in both dollar and local terms, it is again lagging the rest of the region, Brazil (+1.78%) being the next worst. There are myriad of reason and many locals will blame politics but a good look at Mexico (+14%), Chile (+10.3%), Peru (+2.15%) as well as Brazil itself, will tell is that you don’t need a market friendly capitalist icon in order for markets to flourish.
The Peso equally is suffering and again there is more than one factor involved. There has been an 8% slippage since late January after the post-holiday recovery – some due to DXY’s move against global currencies. But also, we had a 6% slip in oil over that period.
It is also important to note that after a couple of months since we passed over the ‘tax reform’ rapids and entered calm waters – we are now heading into some white water referred to as ‘reforms’. Petro is looking to lower energy tariffs by a further 10% and then it will be on to Pensions and Health. All these areas need reform, there is no question about that – however, kid gloves need to be employed – and perhaps Governmental Twitter accounts disabled.
It’s doubtful it will be a quiet week – but have a good one.
Roops
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