Could JP Morgan's negative report on Colombia wipe out BVC's profits in 2025?

The MSCI Colcap index completed two days of negative performance on the Colombian Stock Exchange (BVC), after the American bank JP Morgan stated that Colombia is not a good destination to invest in at this time.

The MSCI Colcap index is the main benchmark for the Colombian stock market and is composed of the 20 issuers and 25 most liquid stocks, weighting the stocks by adjusted market capitalization with no participation limit.

According to information from the BVC, the MSCI Colcap index closed the day on Wednesday with a fall of 0.16 percent and stood at 1,646.13 units.

With this figure, it completes a 0.31 percent decline in the last two days, although the index continues to maintain a gain of 19.32 percent so far in 2025.

Among the companies that registered the sharpest falls on the BVC this Wednesday were ETB (23.53 percent), Grupo Aval (4.17 percent), Cementos Argos (2.40 percent), ISA (1.95 percent) and Ecopetrol (1.65 percent).

On the other hand, the shares that were quoted higher were Grupo Energía Bogotá (3.57 percent), Nutresa (3.54 percent), Grupo Bolívar (2.73 percent) and Davivienda (1.25 percent).

For Wilson Tovar, manager of Economic Research at Acciones & Valores, what JP Morgan said may have a negative effect on the dynamics of the stock market, but the main argument for the appreciation of shares in Colombia is not based on the recommendation of one entity.

For the expert, this appreciation has more to do with the fact that “the share prices of companies listed on the Colombian Stock Exchange are still very cheap. That was what justified the Gilinski Group's takeover bid for Nutresa.”

“Today there are still companies that are very cheap in the Colombian market. I think that many of the business fundamentals per se of many companies in Colombia are not incorporated in the prices,” he added.

Wilson Tovar also said that each investor has a defined investment horizon and that this type of comment from JP Morgan is common.

“I don’t think that anyone who has bought any Colombian stock in the last two months is going to sell it because of what JP Morgan said. These comments are common and for an investor to make money they must make medium or long-term investments, we are talking about 5 or 10 years. If the investor is an investor, I don’t think he is going to run away because of these comments,” he said.

In its report, JP Morgan said that “while there has been increased interest in Colombian stocks following the recent rally triggered by the short-term US tariff threat, we still believe there are no substantial fundamental drivers on the horizon.”

For the US bank, there are local and external risks that must be monitored. Domestically, it says that Colombia continues to have one of the highest monetary policy rates in the region (9.5 percent) and that fiscal pressures persist.

“A potential medium-term catalyst could emerge with the presidential elections in May 2026, which will become a major market driver. Still, we believe it is premature to position for that at this point,” they say.

On the external side, it is noteworthy that US President Donald Trump may continue to use tariff threats against Gustavo Petro as a negotiating tactic on immigration issues, which could lead to further market volatility.

In addition, he notes that efforts to boost U.S. domestic oil production could result in lower oil prices, which would hurt the currency and tax revenues.

Finally, he says that there are risks that could affect Colombian equities. Specifically, he mentions that the pension reform would lead to a decrease in the dynamism of trading volumes in shares due to the drop in inflows to Pension Fund Administrators (AFP).

Despite JP Morgan's comments, the manager of Economic Research at Acciones & Valores highlighted that Colombia is one of the few countries in Latin America that has not defaulted on its debt payments.

“The situation is difficult, but what an investor needs to see is that the rating agencies, despite the warnings, have ratified Colombia's investment grade. JP Morgan is an important player, but not all the resources invested in TES and the stock market in Colombia come from JP Morgan's clients,” he said.