Colombian Stocks Hold Firm as Fiscal Risks Weigh on Peso and Market Eyes Government Clarity

The Colombian stock market closed June 11, 2025, with the COLCAP index at 1,659.35, up 0.60% for the session, according to official exchange data.

This move came as the government’s decision to suspend its fiscal rule and the resulting volatility in the peso dominated investor focus.

The peso finished at 4,190.80 per U.S. dollar, recovering from a sharp drop the previous day, after the Higher Council for Fiscal Policy (CONFIS) authorized the suspension to address a widening fiscal deficit.

Ecopetrol SA led the session’s gains, rising 2.97% to 1,905.00 pesos, supported by firm oil prices and renewed investor appetite for energy shares. Grupo Aval Acciones y Valores SA Pref climbed 1.73%, and Grupo de Inversiones Suramericana SA advanced 1.71%.

On the downside, Promigas fell 1.46%, Corporacion Financiera Colombiana SA lost 1.20%, and Canacol Energy Ltd dropped 0.84%. These moves reflected sector rotation as investors adjusted portfolios in response to fiscal and currency developments.

The government’s suspension of the fiscal rule, established in 2011 to limit spending and debt, has raised concerns about Colombia’s fiscal trajectory.

The fiscal deficit is now expected to exceed the previous 5.1% target, with estimates pointing to a 6.8% deficit for 2024 and public debt-to-GDP reaching 61.3% by year-end.

The finance ministry will address the new fiscal path in a press briefing scheduled for Friday, as investors await clarity on how the government will manage its growing debt burden.

COLCAP Maintains Uptrend Amid Steady Momentum

Technical analysis of the COLCAP index shows the market remains in a clear uptrend on both the four-hour and daily charts. The index trades above its 50- and 100-period moving averages, which act as support.

Bollinger Bands indicate prices are near the upper band, suggesting sustained buying but not yet extreme overbought conditions. The Relative Strength Index (RSI) stands at 56.77 on the four-hour chart and 54.37 on the daily, both below overbought territory, indicating moderate momentum.

The MACD shows a mild bullish crossover, with the histogram turning positive, supporting the case for continued upward movement. Volume remains steady, confirming the trend but not signaling a breakout.

In the currency market, the peso’s recent volatility reflects heightened fiscal risk. The USD/COP pair bounced from support near 4,150 and faces resistance at 4,220.

The 200-period moving average sits above the current price, signaling a bearish longer-term trend for the peso. The MACD’s recent bullish crossover suggests short-term stabilization, but the broader outlook remains fragile as fiscal uncertainty persists.

Compared to regional peers, Colombia’s 15.3% annual gain in equities outpaces most Latin American exchanges, but the market’s low liquidity and rising fiscal risks limit further upside.

Investors now focus on Friday’s fiscal update, which will shape the market’s next move as Colombia navigates its most challenging fiscal environment in decades.

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