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Local Assets Pare Gains As Runoff Vote Beckons

COLOMBIA
  • Bonds have already slipped back to levels last seen before the first round of voting as money managers realize that scarce information about the economic policies of 77-year-old construction magnate Rodolfo Hernandez could prove just as risky as anti-oil leftist Gustavo Petro.
    • Polling continues to indicate the June 19 runoff will be a very close affair.
  • “Both Petro and Hernandez represent risks to the status quo in Colombian politics,” said a portfolio manager at William Blair Investment Management, which owns Colombian debt. “Both candidates will likely struggle to govern and gain the support of congress.”
  • BBVA strategist Mario Castro said he’s expecting a binary market reaction to the final outcome, with investors continuing to favor a Petro loss. Still, risk premium could re-accumulate if Hernandez wins and fails to present economic policies that appease money managers, he said. (Bloomberg)

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