Colombia Fights Looming Downgrade from Emerging Market to Frontier Status
Colombian regulators and investors are actively working to bolster their stock market to maintain its emerging market status.
The Colombian Stock Exchange, government, pension funds, traders, and top companies are jointly devising a plan to boost liquidity and trading volume.
This initiative responds to a JPMorgan Chase & Co. report from last year, which indicated a potential downgrade by MSCI Inc. to a frontier market.
A downgrade would further diminish investment in a market already struggling with low trading volumes, few IPOs, and limited foreign interest.
Andrés Restrepo, the exchange president, called it a wake-up call, stressing the need for in-depth talks to boost market growth and strength.
Following the implementation of this plan, investors have seen a noticeable return.
The Colcap index witnessed a significant 21% rise in dollar value since September, marking it as one of the top global performers, as reported by Bloomberg.
Emerging markets, as defined by MSCI, must meet specific criteria, including economic development, market size, liquidity, and accessibility.
Annually in June, MSCI reviews and announces potential reclassifications of countries within its Emerging Markets Index.
Currently, Colombia barely meets these criteria, with a minimal 0.1% weight in the index.
Colombia Fights Looming Downgrade
The Colombian market is exploring strategies like revising regulations to attract market makers, cutting costs for new stocks, and boosting investor engagement.
These plans are inspired by Peru’s successful efforts in 2015 to avoid a downgrade by MSCI.
The urgency increased following JPMorgan’s report last September, highlighting the risk of Colombia not meeting MSCI’s liquidity requirements.
Jairo Agudelo from Bancolombia spoke about the frequent discussions regarding the potential downgrade of Colombian stocks.
He stressed the advantage of remaining an emerging market for access to a broader range of investors.
Live Market IntelligenceColombia — Live Market Board
Rio Times · Live Market Intelligence
Colombia — Live Market Board
+2.12%
177,999.00
+0.47%
66,935.53
-0.58%
11,016.85
-0.13%
3,291,323
-0.41%
2,392.10
+2.12%
57,890.85
—
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| COLCAP | 2,392.10 | +2.12% | — | 9.04 | 9.05 | 9.02 | 4,133 |
| USD/COP | 3,151 | +0.93% | -24.74% | 3,122 | 3,151 | 3,151 | — |
| BRENT | 90.12 | +1.22% | +29.35% | 89.03 | 90.58 | 87.00 | 1,016 |
| WTI | 84.67 | +1.29% | +25.75% | 83.59 | 86.87 | 81.06 | 235,348 |
| ECOPETROL | 16.77 | -1.58% | +102.29% | 17.04 | 17.31 | 16.68 | 2,173,903 |
| BANCOLOMBIA | 92.52 | -1.46% | +109.70% | 93.89 | 94.21 | 90.71 | 317,821 |
| GRUPO AVAL | 5.28 | +2.75% | +88.57% | 5.14 | 5.30 | 5.12 | 191,097 |
| TECNOGLASS | 43.44 | -0.34% | -42.46% | 43.59 | 44.01 | 43.20 | 156,046 |
| CREDICORP | 400.58 | -0.42% | +69.38% | 402.27 | 413.25 | 400.24 | 347,579 |
| BUENAVENTURA | 30.28 | -4.96% | +77.70% | 31.86 | 31.16 | 30.17 | 635,050 |
| SOUTHERN COPPER | 182.71 | -1.24% | +106.61% | 185.00 | 184.64 | 178.71 | 815,326 |
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