BCA Research issued a contrarian bearish outlook on Colombian financial markets, diverging from the bullish sentiment tied to the potential election of a right-wing government in 2026.

BCA highlighted two significant structural macroeconomic challenges facing the country: unsustainable public debt and a decline in energy exports. These issues, according to BCA, are unlikely to be resolved by a conservative administration.

This stance suggests that investors should continue underweighting Colombia within emerging market (EM) equity and fixed-income portfolios. Furthermore, the firm advises maintaining short positions on the Colombian peso (COP) against the US dollar (USD) and the Chilean peso (CLP).

BCA also recommends betting on a steepening of the yield curve, which implies expectations for higher long-term interest rates relative to short-term rates.

The firm’s bearish view is based on the assessment that Colombia’s economic challenges are deep-rooted and not easily addressed by a change in government.

BCA’s analysis suggests that, despite the market rally on the anticipation of a right-wing government, the underlying issues of debt sustainability and energy export decline remain significant concerns.

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