Colombia’s presidential election has delivered a stark choice for voters, with a pro-Trump populist forcing the leftist incumbent into a runoff. The result, confirmed late Sunday, has sent ripples through London’s financial district, where gilt yields twitched in response to the prospect of further regional instability.
Rodrigo Hernández, a former businessman who has styled himself as Colombia’s answer to Donald Trump, fell just short of an outright majority, securing 47% of the vote against President Gustavo Petro’s 40%. The remaining votes were split among minor candidates, ensuring a second round in June. Hernández, who has promised to slash taxes, privatise state assets, and crack down on crime, has drawn comparisons to Trump and Brazil’s Jair Bolsonaro. His campaign, funded largely by his own fortune, has been marked by nationalist rhetoric and attacks on the ‘political establishment’.
The market reaction was immediate. The peso weakened sharply, losing 3% against the dollar in early trading, as investors priced in the risk of a Hernández victory. Colombian sovereign bonds also took a hit, with the 10-year yield jumping 50 basis points. The cost of insuring Colombian debt against default, measured by credit default swaps, soared to its highest level in six months. ‘Markets hate uncertainty,’ said a trader at a London hedge fund. ‘And a Hernández presidency is about as uncertain as it gets.’
For the UK, the stakes are high. Britain has long viewed Colombia as a key ally in a volatile region, a bulwark against leftist movements in Venezuela and Bolivia. The Foreign Office has been monitoring the election closely, with officials in Bogotá warning that a Hernández victory could embolden other populist movements across Latin America. ‘We have a significant economic and diplomatic stake in Colombia’s stability,’ a Foreign Office source said. ‘A Hernández win would be a major headache.’
The runoff campaign is expected to be brutally negative, with Hernández likely to paint Petro as a socialist who has failed to deliver on promises of peace and prosperity. Petro, a former guerrilla, has been dogged by scandals and a sluggish economy. Inflation is running at 13%, and unemployment remains stubbornly high. ‘Petro has been a disaster for the economy,’ said a local analyst. ‘Hernández is tapping into real anger.’
But Hernández’s critics warn that his economic plans are a recipe for disaster. His proposed flat tax and deregulation agenda would blow a hole in public finances, they argue, while his protectionist trade policies would scare off much-needed foreign investment. ‘He’s selling a fantasy,’ said a former finance minister. ‘Colombia isn’t the United States. You can’t just slash taxes and expect the economy to boom.’
For now, the City is holding its breath. The next few weeks will see a flurry of polling and policy announcements as both candidates jostle for position. But one thing is clear: the days of smooth sailing for Colombian assets are over. As one trader put it, ‘We’re in for a bumpy ride.’
The UK, with its own fragile recovery and a government obsessed with fiscal discipline, will be watching closely. A Hernández win would not only destabilise Colombia but could also rattle emerging markets more broadly, with knock-on effects for British pension funds and insurers who have significant exposure to the region. ‘This is a test of the market’s resilience,’ said Thorne. ‘And I don’t like the look of the charts.’
