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  • Invest With Colombia For Brazil-Like Returns 0 comments
    Jan 21, 2013 12:57 AM

    Colombia has achieved a gradual but successful image makeover from that of a leftist guerrilla laden country to one that has achieved a huge rush of foreign investors in the year 2011 taking foreign investments up by 56% to $14.8 billion. The national stock market benchmark; Indice General de la Bolsa de Valores de Colombia [IGDC] has outperformed most of its Latin continent cousins with an annual return of 10% delivered to its investors. Major market equities along with broader market product such as Global X Colombia ETF have in fact beaten the general index too with yearly returns close to 14%.

    As per the International Monetary Fund projected outlook, Colombiahas duly delivered a GDP growth of +4.5% for the financial year 2012, therefore outperforming the GDP growth rate of Euro zone of 1.1% and that of United States' 1.8%.

    The Latin America nation that has climbed ahead of countries like Brazil in terms of real growth rate has done so remarkably in times of the recession mess in United States and amid global growth that has been considerably sluggish. The reformation and revival programmes began in this country in the year 2002 stipulated by the then president, and his policies have been carried forward to this day. Violent times seem more or less over in this country and new beginnings seem to be born such as tourism, fortunate rates of economics growth (since the year early 2000's) and increase in outside investment, where a sizable amount is now entering the capital markets through Colombian funds and ETFs

    The economy has benefitted through the increase in oil production. New state norms that allow foreign participation in the Oil and Gas sector have initiated a series of new exploration projects and institutional investments. Previously such offers were shut for outsiders. Oil and minerals play a vital role in foreign speculation thus offering immense scope for such investments. In addition the United States and Colombia have signed a free trade agreement which promises a boost in the latter's economy. Its trading position receives impetus from its potential geographical location - close to both east and west coast United States markets.

    As per the government estimates, the formalisation of recent FTA with America will produce about 3, 00,000 new jobs for the citizens of the country.

    Ecopetrol (the oil company) stands as the most obvious beneficiary and is greatly expanding due to nation's offshore and onshore enticing oil deposits.Ban Colombia, the largest bank of the nation is another stock that may entice investors convinced with the asset class and has also seen a fair amount of cash inflows for its listed securities and ADRs during the past year.

    Unemployment figures have fortunately fallen; this will boost the advancement of the middle class furthering pushing the domestic consumption. The key industries' listincludes- textiles, food processing, oil, clothing and footwear, beverages, gold, coal, cement, chemicals and emerald. The overall economic development and foreign direct investment (NYSE:FDI) has enhanced with minimum country specific risks, as its government has created an economic and regulatory environment constructive for business expansion of the indigenous companies which will go a long way in establishing trust among the off-shore investors.

    Colombia ETF in the coming times may provide for a much more harmonious investment break than its neighbouring oil exporting states such as Venezuela, Brazil and Mexico. The success is rubbing off on the stock markets as well, and there is a noticeable upsurge in public offerings to raise funds for expansion by attracting new customers. Foreign Investors may tap the opportunity through Colombian centric equity traded funds to get an indirect exposure to the 20 most liquid securities of the country that make up the FTSE Colombia 20 Index.

    Global X GXG ETF is a broader market product that attunes to the performance of the FTSE Colombia 20 benchmark and delivers after a rationale annual expense of 0.83%. Exposure received is among the 20 most liquid stocks from the country including Ecopetrol and Ban-Columbia.Global X GXG is a $120million fund, has a P/E of 17 andhas yielded 14% standardised returns for 2012.

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