Ricardo Bonilla, Minister of Finance, defended the value of Ecopetrol’s action: “JP Morgan is not a rating agency”
Finance Minister Ricardo Bonilla defended the recent drop in Ecopetrol’s share price by arguing that the situation was worse under previous governments. According to W radioBonilla pointed to a 30% cut in the oil company’s stock price target reported by JP Morgan.
You can now follow us on our WhatsApp channel and in Facebook.
Bonilla clarified that JP Morgan is not a rating agency, so Ecopetrol’s rating was not affected. “Stocks are up today,” the portfolio manager said, downplaying the impact of the investment banking report. In addition, he noted that JP Morgan’s commentary focused on a specific Crownrock project in which the entity had an interest.
The minister presented a graph illustrating the development of Ecopetrol’s share price. The stock was valued at $2,315 at the start of President Gustav Petr’s administration, and is currently at $1,850, a 20% drop. In contrast, during Ivan Duque’s administration, the stock went from $3,000 to $2,315, a 22% reduction.
Bonilla also highlighted that the lowest price of Ecopetrol shares was recorded between 2015 and 2018, reaching at least 800 pesos. At that time, according to the minister, there was no talk of the collapse of the oil company.
Ecopetrol, Colombia’s main oil company, has seen its shares fall significantly after JP Morgan downgraded its rating. Bank of America downgraded shares of Ecopetrol from “Neutral” to “Underweight” and adjusted their price target for the stock from $12 to $8.50, according to JP Morgan.
The decision is based on several factors that affect Ecopetrol. These include pressure on refining margins, limited production growth, conflicts between major players and geopolitical instability. Despite a drop in guerrilla attacks on the company’s assets and higher-than-expected oil prices, these issues led to the downgrade.
The market reaction was immediate. Ecopetrol shares fell 6% on the New York Stock Exchange after the announcement and are down 26.59% this year. This decline affects not only the company, but also the perception of investors and the ability of Ecopetrol to raise capital necessary for future projects and operations. However, it is not entirely clear why the bank statement carries such weight.
JP Morgan Chase & Co. is a global financial institution with a long history in the world of finance. Its roots go back to 1799, when JP Morgan & Co. was founded in New York. Over the years, the company has gone through various mergers and changes, but its legacy has continued ever since. In 2000, there was a major merger between JP Morgan & Co. and Chase Manhattan Bank, creating JP Morgan Chase & Co., one of the largest and most powerful banks in the world.
The company excels in several business areas, including investment banking, financial services, financial asset management and private equity. Although headquartered in New York, JP Morgan Chase & Co. operates in more than 100 countries and has established itself as a global leader in the financial sector.
Regarding Ecopetrol’s rating, the target price is an estimate of the future value that the stock or financial asset is expected to achieve in the market. This downward revision reflects the bank’s concerns about Ecopetrol’s future performance in a challenging market environment.
JP Morgan’s decision has caused concern among investors and market analysts, who are now reassessing their positions and expectations about the Colombian oil company.