Seeking Alpha

john71701's  Instablog

john71701
Send Message
  • When And Where To Invest In Colombia? 3 comments
    Feb 13, 2013 4:47 AM

    Colombia is fast attaining the label of being the NEO-Brazilon the Wall Street because of its local credit boom and heavy direct foreign investments. Last year its economy grew at a pace of 6% outshining its neighbours of the Andean region.International investments rose 26% in the first half of the fiscal year 2012. These companies have dispensed billions of dollars into the Andean nation's oil and mining sector.According to the nations' central bank, 82% of the foreign investments have gone into energy and commodities.

    With Colombian Peso emerging as the world's best performing currencies so far, growing almost 9% in contrast to the American dollar, analysts are more than willing to justify the +14% returns of the indigenous capital markets in 2012 and even better returns of 16.27 % derived from the selective FTSE listed Colombia ETFsand related local ADRs.

    Colombia is the world's fourth largest exporter of coal and the fourth biggest oil producer around the Andes,the tourism industry is being aggressively liberalised and the government is focussed on stabilizing the internal security and reforming the economy. Solid opportunities for financiers and investors are brewing through a rising entrepreneurial and educated middle class, enlargement of the business sector and expansion of the domestic consumption.Further the economy has had GDP growth of over 4% since the year 2003.

    According to a report by the governor of the central bank the GDP growth for the 2012-13 year has been around 6% outperforming the International Monetary Fund guidance of 4.5%.

    The economy is further stimulated by the falling unemployment figures, local companies expanding their operations and the government creating favourable trade conditions and creating transparent policies.Counter to this approach, the neighbouring countries such as Venezuela and Bolivia have shown resistance to foreign investment.

    Colombia has signed Free Trade Agreements with the United States, Canada, Chile, Mexico, Switzerland, Turkey, South Korea, Japan, Israel and Venezuela. Economic risks are reduced with deregulation of the economy and legal reforms providing helpful business growth.

    There are a number of risks one needs to ponder upon that arise when investing in a foreign country or company. In Colombia the security risks have been solved to an extent with de mobilization of the Para military groups, Timely military surge has secured infrastructure of towns and cities by pushing the FARC (Revolutionary Armed Forces of Colombia) away from populated areas. Another area is infrastructure and the government of this country is taking steps to improve roads and internal transportation and communication.Although a nationwide acceptance of corruption continues to mar the growth but extensive programmes are being implemented to reduce this menace.

    How to invest in Colombia and its corporations? The natural route of direct equity investing on the local exchange Bolsa De Valores de Colombia (BVC) may require a lot of homework, and compliance issues hence most foreign investors dabble with the NASDAQ listed American Derivatives [ADRs] of some of the largest Colombian Company Equity like Eco Petrol and Ban Columbia, latter being the biggest bank of the country.

    A very stable exposure can be achieved through equity traded products that focus on the nation's financial growth.Products like Colombia Fund and ETFs track the FTSE Colombia 20 Indexwhich is designed to measure broad based equity market performance in the country by tracking the 20 most liquid and large cap Colombian stocks and delivers as per the performances of their American listed ADRs.

    Global X Colombia ETF [GXG] is a true copy of its name sake benchmark in terms of asset allocation. The annual operational expenses are charged at 0.83% and along with Eco-Petrol and Ban-Colombia; PACIFIC RUBIALES ENERGY, GRUPO AVAL ACCIONES VALOR, CELSIA SA ESP and INTERCONEXION ELECTRICA are also among the top ten stocks with each accounting for about a 5% of the assets of GXG ETF.

Back To john71701's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (3)
Track new comments
  • camalo861
    , contributor
    Comments (3) | Send Message
     
    I am a Colombian and it is real painful for me to see people from other countries coming to Colombia to start a business here. i have helped a lot of people to do that. Most of them were deceived. For instance they were not told about those big lines at the Dian ( taxes and customs department) Any time you have to updated the nit ( your company ID number) you have to do a long line and sometimes you do not have the proper documentation, because you did not know about, then you have to go and bring the proper documentation. Mostly all the papers have to be authenticated by a notary, this means that you are wasting a lot of time. There is another fact: crime, mot of the businesses have to pay an amount of money to criminal bands supposedly by protection and you cannot go to the police because there are a lot policemen who are crooked.
    19 Mar 2013, 04:58 AM Reply Like
  • camalo861
    , contributor
    Comments (3) | Send Message
     
    It is real hard to perform scalping trading at local exchange Bolsa De Valores de Colombia (BVC), because of the voumen.
    22 Mar 2013, 02:43 AM Reply Like
  • camalo861
    , contributor
    Comments (3) | Send Message
     
    A lot of Colombians are learning to invest in the New York exchange Market. They want to learn all about it, but most of the local traders do not how to teach them how to become real good at it.
    22 Mar 2013, 02:43 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.