Colombia Stocks, Bonds May Rise as Uribe Gets Congress Majority

Colombian stocks and bonds will probably rise today after President Alvaro Uribe secured a majority of seats in Congress, boosting his chances of pushing through free trade, pension and tax bills in a second term.

``Yesterday's elections proved an even bigger triumph for Uribe than expected,'' said Rupert Stebbings, a trader at Assesores en valores brokerage in Medellin, which manages about $30 million in Colombian stocks and bonds.

A win for Uribe, who polls show will win a second presidential term in May, would buck a South American trend of victories for leaders such as Bolivia's Evo Morales, Chile's Michelle Bachelet and Venezuela's Hugo Chavez, who vow to share their nations' wealth more equitably with the poor. Uribe, a former Liberal party member and Washington ally, spurred economic growth by cutting the violence caused by guerrillas and paramilitary fighters who have used income from drug trafficking to fund a four decade war.

With 95 percent of votes counted as of 5:08 a.m. New York time, five of the main parties backing Uribe, 53, were projected to win 61 seats, or 60 percent, in the Senate, according to the national registry's Web site. The sixth one, ``For the Country We Dream of,'' was defeated in its race. The opposition Liberal Party was projected to win 17 senate races.

The Liberal party fell into third place behind La U and the Conservative party, Uribe backers that took 20 and 18 seats respectively, the registry said. In all, 166 lower house and 102 senate seats were contested in the election.

``Historically the problem for Presidents has been patching together an alliance of splintered parties in order to achieve anything,'' Stebbings said. ``Those days appear to be over. One would expect the markets to react positively.''

Bond Yields

The yield on the government's dollar-denominated bond due 2012 fell to 6.18 percent at 8:40 a.m. New York time, less than half the yield of 12.99 percent on Aug. 7, 2002, when Uribe took office. The benchmark IGBC stock market index has risen almost ninefold and the peso has gained 18 percent against the dollar.

Colombia's central bank estimates the economy expanded more than 5 percent last year, the most in a decade, as Uribe's efforts to stem violence lifted consumer confidence and boosted investment.

Still, investors such as Nick Field of WestLB Asset Management in London think Uribe may have a tough time pushing through his economic agenda even with congressional backing.

``He'll start strong, do some fiscal reform, and then run out of steam earlier than expected as second term blues catch up,'' Field said.

Uribe took advantage of the results of yesterday's election to urge peace and an end to the war. Colombian officials said the vote went off with little violence, after rebels had threatened to disrupt the election.

Plea for Peace

``I ask the Revolutionary Armed Forces of Colombia to revise its behavior, review the democratic calling of all Colombians and consider the possibility of serious and urgent peace talks,'' Uribe said, according to the presidential Website.

Polls showed Uribe, who is running after a change in the constitution to allow re-election, would win a majority in the first-round vote on May 28. Uribe would get 54 percent of voter support while Liberal Horacio Serpa, the front-runner from the biggest opposition party, would come in second with 20 percent of the votes, according to a poll by Datexco Company.

Datexco polled 1,200 people nationwide from Feb. 8 through Feb. 20. The survey had a margin of error of plus or minus 2.9 percentage points.