Daily Colombian Equities Bulletin and Fundamentals 10-07-13
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October 8, 2013 (www.investorideas.com newswire) U.S. markets kicked off the week with sharp losses as government shutdown in the country continues. The Congress has been unable to reach an agreement on the budget talks, which has cause duncertainty for investors. As a result, the S&P 500 lost 0.85% and fell below 1,680. Meanwhile, the Dow Jones hit the lowest level in one month (14,936) and decreased 0.90%. For the upcoming sessions we expect volatility to continue unless U.S. lawmakers reach a common ground.
LatAm markets had a mixed performance during the day, where we highlight a 1.12% loss in the Mexican market. In the local front, the Colcap index finished slightly higher (+0.11%) at 1,753.6 and cut losses from toda ´s session. Although the local market has been losing momentum, we highlight that the index was able to close above our key support level of 1,750. Going forward, we continue to look for positive catalyst that can support an additional upside.
On the corporate side there was a relevant news for the market:
Ecopetrol: The company announced that the Caño Limón - Coveñas pipeline suffered a violent attack. As a result, the company has initiated a contingency plan to mitigate the negative effect from this event. We highlight that it's the third attack in less than a week to this pipeline, which has proven to be costly to Ecopetrol.
Nevertheless, Ecopetrol shares closed slightly higher during the session (+0.35%) not being affected by the news. That said, we remain cautious on the stock as we expect to have higher volatility on the foreign front that could also impact oil prices. Here, it is worth mentioning that Ecopetrol is the most liquid stock and has lots of exposure to international investors.
On the macro level, we highlight that the local Consumer Price Index (CPI) was published on Satuday. The monthly variation for September (+0.29%) was higher than market expectations (+0.17%) and Corredo res Asociados (+0.11%). As a result, the annualized inflation in Colombia remained at 2.27%; however, for the year end, we expect this figure to climb up to 2.58%.
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