Colombian markets cautious after far-right De la Espriella's presidential election

Colombian economic markets adopted a cautious stance following the election of far-right figure Abelardo de la Espriella as president for the 2026-2030 term. Despite his victory, analysts warn that De la Espriella will confront substantial challenges upon taking office on August 7.

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The market is highly volatile not only because of internal issues but also because of the external context, mainly the conflict between the U.S. and Iran, and that state will continue in the coming weeks.

The foreign exchange market saw the dollar continue its recent downward trend, opening at 3,389.50 pesos, a 2% decrease from Friday's close. Munir Jalil, chief economist at BTG Pactual for the Andean Region, noted the market's volatility, attributing it to both domestic issues and external factors, particularly the conflict between the U.S. and Iran. He anticipates this volatility will persist.

On the Colombian Stock Exchange, the MSCI Colcap index opened 2.6% lower, reaching 2,437 points. This decline was largely driven by a 10% drop in shares of the state-owned oil company Ecopetrol. Paradoxically, the oil and gas sector is considered one that could benefit from De la Espriella's government.

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The triumph of De la Espriella was much less than expected.

De la Espriella secured victory with 12.9 million votes, or 49.66%, narrowly defeating Iván Cepeda, who received 12.7 million votes (48.70%). Jalil commented that De la Espriella's win was narrower than anticipated, with a margin of just 0.96 percentage points, contrary to pre-election polls predicting a wider gap.

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Colombia's elections are part of a larger wave in Latin America of more market-friendly presidents.

Daniel Guardiola, director of Equity Research at BTG Pactual Colombia, described De la Espriella's election as part of a broader trend in Latin America towards more market-friendly presidents. However, he outlined several critical challenges for the incoming administration: fiscal issues, inflation, economic growth, an energy crisis, a health crisis, and security concerns. Guardiola emphasized that De la Espriella will inherit a country facing multiple crises that will require significant funding to resolve. Jalil added that the new president must stimulate investment to return Colombia's economic growth to above 3%, as it has stagnated around 2.5% post-pandemic. Guardiola identified potential beneficiaries of De la Espriella's policies as the oil and gas sectors, infrastructure, and public services. He noted that Colombia has become a net importer of gas, facing supply shortages.

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The truth is that he will inherit a country with multiple crises and to solve that requires money.