(Bloomberg) -- Economists and analysts welcomed Colombia President-elect Gustavo Petro’s pick of renowned economist Jose Antonio Ocampo as Colombia’s finance minister, but said more signs of political moderation might be needed to lure investors to the nation’s battered assets.

The Colombian peso weakened on Thursday as Petro’s choice of a market-friendly minister wasn’t enough to offset a negative mood toward emerging-market currencies. 

Ocampo, 69, is one of Colombia’s best-known economists and has a doctorate from Yale. He served as finance minister in the 1990s, was head of the National Planning Department, and more recently a central bank board member. He has held several positions at the United Nations and is also a long-time professor at Columbia University in New York. 

Read more: Petro Names Experienced Ocampo as Colombia Finance Minister

Here is what economists and analysts are saying:

  • Alejandro Arreaza, economist at Barclays
    • Ocampo’s pick as finance minister as well as Petro’s talks with centrist parties are “a signal of moderation,” he said
    • “Petro seems to understand the political constraints that he faces and is showing willingness to negotiate the changes that he would like to implement, which should contribute to contain risks for the market”
    • Ocampo is an experienced economist who understands the challenges the economy is facing while seeking to meet social demands with fiscal responsibility, according to Arreaza
    • “That will not be an easy job considering the high expectations that Petro has generated in the electorate but in his favor he has a positive economic backdrop”
  • Julio Romero, economist at Corficolombiana
    • “It’s key to understand what the priorities of the tax reform will be and Ocampo’s position regarding the commodity sector, since Petro’s proposals to phase out that industry generate a lot of concern”
  • Carolina Monzon, economist Itau Corpbanca Colombia
    • Ocampo’s extensive experience would guarantee that the tax reform that Petro has spoken about will balance raising taxes and preserving economic growth
    • Ocampo’s return to the board of the central bank, now as finance minister, will be key to determine how far the rate increasing cycle will go
    • She estimates the benchmark rate will reach 9.5% at the end of the current cycle
    • “While the news may be positive for markets, we would have to wait for more comments from him and the international scenario is very volatile,” she said
    • In that sense, it’s difficult to see a strong rally in Colombian assets, according to her
  • Daniel Rico, strategist at RBC Capital Markets
    • If Petro “wants to pass his structural fiscal reform he will need to focus on the top 1% and large wealth redistribution”
    • This could trigger large capital outflows, leaving the balance of payments “at risk”
    • “Therefore the government will have to play a larger role in controlling capital outflows”
  • Benito Berber, economist at Natixis
    • “It’s a good sign. He’s an official with a lot of experience, and respected in and outside Colombia”
    • “Petro is signaling that he’s committed to fiscally prudent policies”
    • “The Colombian peso isn’t reacting because there are very strong headwinds,” but it will likely advance in the coming days
  • Juana Tellez, economist at BBVA Colombia
    • “Ocampo is an economist with an excellent academic background and extensive work experience on different fronts”
    • “That gives him all the tools to face the economic situation in Colombia and put the country on track to meet medium-term needs”
  • Daniel Velandia, economist at Credicorp Capital
    • The external environment is very complicated and that limits the advance of assets in Colombia
    • In relative terms, a very short-term positive impact could be seen compared to its peers, which may not last long
    • Assets may perform well if Petro choses market-friendly names for relevant ministries and government institutions
    • However, all these reactions will probably be temporary as the most important driver for markets will be his reform agenda to be presented to congress
    • Investors will scrutinize his policy proposals for the oil industry and the tax and pension reforms, which will have a direct impact on capital markets.

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