Colombia’s bourse seen strong, some talk of bubble

* Some shares show relative overvaluation

* Bourse soars 90 percent since 2009 on fundamentals

* Market seen having less risk, being more liquid

By Javier Mozzo

BOGOTA, Oct 26 (BestGrowthStock) – Colombia’s stock exchange
(BVC.CN: ) is seen softening next year but keeping up strong
growth after soaring since 2009, raising questions about
whether the market is in a “bubble,” analysts said on Tuesday.

The Andean nation’s bourse index (.IGBC: ) has hit historic
highs this year, nearing 16,000 points, given low interest
rates, ample liquidity and good economic performance — surging
some 53 percent in 2009 and 37 percent so far this year.

While some experts warn of a possible bubble driven by
strong capital inflows due to fragile markets in developed
nations, low interest rates and the falling U.S. dollar,
brokerages and the bourse say the market is only recovering.

“It’s one thing to say that some shares are expensive; it’s
another to say that there’s a bubble,” Colombian Stock Market
President Juan Pablo Cordoba said on local radio.

“It seems to me unjust and irresponsible to make these type
of generalizations,” he said. “Let’s not forget that the market
had fallen 30 percent in the year before the 2008 financial
crisis. A big part of what we’re seeing now is a recovery.”

Growth was been driven by oil firms Ecopetrol (ECO.CN: ) and
Pacific Rubiales (PRU.CN: ) as well as the Grupo de Inversiones
Suramericana (SIS.CN: ) and Bancolombia (BIC.CN: ). Average daily
trading volume has broken $100 million, an historic high.

Brokerages said market growth will be more moderate in the
coming months due to solid economic fundamentals and the
integration of bourses in Santiago, Lima and Bogota. Colombia’s
economy is seen growing around 4.5 percent this year after
expanding 0.8 percent in 2009.

The integration of the three stock platforms should draw
more investment, especially from foreign companies looking to
list their shares overseas.

Other emerging markets have seen so-called “hot” money flow
into their nations, which has also put pressure on domestic
currencies and seen some countries intervene in their foreign
exchange markets to try to control the appreciation.

While Colombia is enjoying strong demand thanks to growing
expectations its debt may soon regain an investment-grade
rating, net foreign portfolio inflows were $179 million from
January to September, with $951 million coming in and $772
million going out, according to central bank data.

“The market could take an occasional breather but in
general the tendency will continue being positive for a while
because there’s the context of global liquidity that will be
maintained possibly until the first half of 2011,” said
Stefania Leon, an analyst with Correval.
(Writing by Jack Kimball; Editing by James Dalgleish)

Colombia’s bourse seen strong, some talk of bubble