COLCAP Drops 2.5% as Colombia Selloff Deepens With Weekly Loss Exceeding 6%

Colombia’s MSCI COLCAP index tumbled 2.54% on Wednesday February 5, closing at 2,320 points and extending its weekly decline to 6.23% as the post-January euphoria continues to unwind.

The peso gave back gains from the Petro-Trump summit, with the dollar rising 0.36% to COP 3,699.9, as investors digested the implications of BanRep’s 100 basis-point rate hike from the prior week and braced for today’s DANE inflation report.

Key Market Data — Session of February 5, 2026

Performance Analysis

Wednesday’s session marked another punishing day for Colombian equities as the COLCAP shed 60.49 points, or 2.54%, closing at 2,320.55.

The index has now fallen more than 240 points — roughly 9.4% — from its all-time high of 2,562 reached on January 27, erasing a significant chunk of January’s historic 19.67% rally.

Trading volume during the month of January had surged to COP 4.71 trillion, an 84% increase over December 2025, but the momentum has clearly reversed as February opens with persistent selling pressure.

Financials, which now comprise approximately 58% of the index composition, bore the brunt of Wednesday’s losses. The sector’s dominance in the COLCAP — a structural shift from the oil-heavy index of years past — means that rising interest rates have an outsized impact on valuations.

Ecopetrol also weighed on sentiment, with Brent crude hovering near USD 60 per barrel, the state oil company’s base-case assumption for 2026 capex planning.

The energy sector’s share in the COLCAP has dwindled to just 8%, but Ecopetrol remains a bellwether for foreign investor sentiment.

On the currency front, the dollar rose 0.36% to COP 3,699.9, partially reversing the peso’s strong run that had taken the pair as low as COP 3,590 on February 3 during the Petro-Trump White House meeting.

Despite Wednesday’s rebound, the peso remains one of the best-performing emerging market currencies in 2026, appreciating 11.88% year-over-year.

The recent government debt issuance of approximately USD 5 billion has kept dollar supply elevated in the local market, acting as a structural anchor for the peso.

Key Drivers

The market continues to digest the Banco de la República‘s January 30 decision to hike its benchmark rate by 100 basis points to 10.25%, the first increase since the previous tightening cycle.

The minutes, published on February 4, revealed that four directors voted for the hike, two preferred a 50 bps cut, and one favored holding steady.

BanRep’s technical team projects inflation will close 2026 at around 6.3%, more than double the 3% target, driven by excess demand, a substantial minimum wage increase, and inflation expectations that have become unanchored among analysts and financial markets alike.

The diplomatic tailwind from the February 3 Petro-Trump summit proved short-lived. While the two-hour meeting at the White House was broadly viewed as positive — with agreements on counter-narcotics cooperation and discussions about regional stability in Venezuela — analysts had warned that the exchange rate impact would be limited.

Adrián Garlati, economics professor at Universidad Javeriana, noted that U.S. pressure tends to target the president personally rather than Colombia’s broader economy, and that structural factors like the 10.25% policy rate matter far more for the peso’s trajectory.

Oil prices remain a persistent headwind. Ecopetrol has outlined a 2026 investment plan of up to USD 7.2 billion, with 70% allocated to hydrocarbons and projected output of 730,000-740,000 barrels of oil equivalent per day.

However, low proven reserves, limited exploration success, and ongoing policy uncertainty under the Petro administration constrain the long-term outlook.

A Seeking Alpha analysis from January described the company as facing “mounting headwinds,” noting that despite an 8x earnings multiple and a 22% dividend yield, upside remains capped without meaningfully higher oil prices.

Technical Outlook

The COLCAP has broken below its Ichimoku conversion line on the daily chart, with the 14-period RSI settling at 48 — neutral territory after correcting from overbought levels.

The weekly MACD has crossed bearish, signaling potential exhaustion of January’s bullish impulse. On the 4-hour timeframe, the index is approaching the Ichimoku cloud with an RSI of 56, suggesting buyers may defend the 2,280-point zone in the near term.

For USD/COP, the pair trades within the daily Ichimoku cloud, with clear support at COP 3,655 that held as a floor in late January, and resistance in the COP 3,720-3,775 band capping dollar rebounds.

Analyst Perspectives

Andrés Sánchez, FX associate at Credicorp Capital, noted that the carry trade strategy continues to favor the Colombian peso, and that if the positive tone from the U.S.-Colombia summit holds, the exchange rate could settle in the COP 3,580-3,600 range.

Corficolombiana’s equity research team projects the COLCAP could approach 2,450 points by December 2026, provided a more investment-friendly political environment materializes and bank credit portfolios continue their recovery.

Looking Ahead

With today’s DANE inflation report poised to confirm an acceleration in consumer prices, Colombia’s markets face a tense session.

The tighter monetary stance strengthens the peso but pressures equity valuations, while fiscal uncertainty, weak oil prices, and rising inflation expectations set the stage for continued volatility through the first quarter of 2026.

This is part of The Rio Times’ daily coverage of Colombian markets and Latin American financial news.

For context on regional markets, see Brazil’s Ibovespa for the same session.

Also tracking regional peers: Chile’s IPSA closed the same session.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error