Colombian Companies on the New York Stock Exchange: Evaluating ADR Performance and Market Outlook

2023-09-12 04:58:56


The last ten years have not left a good balance for Colombian companies listed on the New York Stock Exchange through American Depositary Receipts (ADR).

There are currently eight companies of national origin that are traded in the largest financial district in the world, but experts agree that only three of them are exchanged in relevant stock market operations.

“There are several companies that have a registered ADR, but most are traded in desk operations, that is, outside the stock market. You can only see the real-time price of Ecopetrol, Grupo Aval and Bancolombia,” explained Andrés Moreno, analyst and financial advisor.

He indicated that Tecnoglass and Procaps are different because their shares are listed directly on the New York Stock Exchange and people domiciled in Colombia cannot buy them (see To Learn More).

The president of Ecopetrol, Ricardo Roa, rang the iconic bell of the New York Stock Exchange yesterday to celebrate the company’s first 15 years on that stock market. However, the anniversary fell at a time when the stock is far from the highs it reached ten years ago.

In relation to the state oil company – which is also the largest company in the country by the amount of its income – Moreno indicated that he would divide his history on Wall Street into three chapters.

“It started in 2008 and had a very good performance between 2009 and 2013, a period in which the stock went from US$13 to US$65. Then, there was a very bad period between 2013 and 2016 in which the stock went from US$65 to US$5 because the entire oil crisis at that time hit it very hard,” said the analyst.

Finally, he indicated that from 2016 to the present the behavior has been neutral: “It has little prominence, the trading volume is not bad but the cycle of emerging countries, the new hydrocarbons policy of the government in Colombia and the recent fall in “Oil prices have caused it to not rise much.”

For its part, Bancolombia reached those big leagues in 1995 and its ADR reached a maximum price of US$70 in 2013; exceeding by a notable difference the value at which it debuted (US$14.50).

However, currently this title fluctuates between US$25 and US$27, showing a drop of around 63% in the last 10 years.

“It hasn’t done very well in the last 10 years, the stock market cycle in Colombia and emerging countries has not been good. But it is a recognized company,” Moreno said, explaining that this ADR “reflects the country risk a lot.”

It must be remembered that the aforementioned country risk is measured by Credit Default Swaps (CDS), which are the insurance that the investor pays to protect themselves from a possible default by a debtor State. And due to the uncertainty due to the change of government, Colombia’s CDS are the highest in the region among comparable countries.

Despite this, the experts consulted here agreed that Bancolombia’s approach to the New York Stock Exchange has been positive and the current price of the ADR is 77% higher than that registered on the day of its debut.

Meanwhile, Grupo Aval has shown the most discreet performance among the three most representative ADRs, since it started with a value of US$13.65 in September 2014, reached a maximum of US$14.92 that same month and lost value significantly. progressive. Currently, that security is trading between US$2.6 and US$2.3.

Almacenes Éxito has just been unpacked in the financial district and on the day of its release (August 23, 2023) it closed at US$5.77, but it has not rebounded either, given that it is currently trading at US$5.50. In this regard, Gregorio Gandini, financial analyst, indicated that this ADR may still be a little affected by the corporate situation, since Grupo Éxito is for sale and the market does not know in whose hands it will remain.

Orlando Santiago, analyst at Fénix Valor, indicated that the performance of these ADRs reflects the behavior on the Colombian Stock Exchange (BVC), where the price of the securities also fell (see Chart). In that sense, he indicated that, basically, a company is listed in New York to give more liquidity to shareholders, so that they can buy here and there, but the performance is tied to fundamentalist events in its main markets.

He pointed out that after the pandemic, Colombia was beginning to recover between 2021 and the end of 2022, but the change of government came and the market overreacted in such a way that it has not yet stabilized and the prospects are still uncertain.

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