Colombia's presidential election has descended into a binary choice that would make any City trader blanch. The run-off on Sunday pits Gustavo Petro, a left-wing former guerrilla, against Rodolfo Hernández, a pro-Trump property magnate. For investors, this is not a choice between stability and change; it is a choice between two types of volatility.
Petro’s platform of nationalising pensions and halting oil exploration would send shockwaves through the country’s sovereign bonds. Hernández, meanwhile, promises to slash taxes and cut spending, but his erratic style and disdain for institutions raise questions about his ability to govern. The peso has already weakened 8% this year, and capital flight is accelerating.
The bottom line is clear: whichever candidate wins, Colombia’s fiscal discipline will be tested. The market is pricing in a disorderly outcome, and rightly so.
