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A Potential Columbian ETF On The Horizon

|Includes: iShares MSCI All Peru Capped ETF (EPU)

Peruvian Finance Minister Luis Carranza rang the opening bell at the New York Stock Exchange to declare the market open this morning. As you will remember, on June 22, 2009, iShares, the world’s largest provider of exchange traded funds (ETFs) announced the launch of the first Peru ETF listed in the U.S., the iShares MSCI All Peru Capped Index Fund (NYSEARCA:EPU). The ringing of the bell this morning is somewhat of a debut of this new Peruvian ETF. (see our previous story on the debut: iShares Announces Launch of iShares MSCI All Peru Capped Index Fund)

Following the opening bell, Daniel Gamba, of iShares Latin America, and Luis Carranza Ugarte, Peru’s minister of economy and finance, spoke with CNBC on the significance of the All Peru Capped Index Fund, and why Peru itself is a good investment. They threw out some fun facts that makes for ok viewing, although towards the end of the Video, Danial Gamba was posed the following question: Who is next in line for a Latin American ETF? Danial states that they are looking into Columbia and Argentina as potential candidates.

We decided to look into the Columbian economy to see what the ETF would be composed of, and found the following on, “Colombia is rich in minerals, including petroleum, natural gas, coal, iron ore, nickel, gold, copper, emeralds, and platinum. The saltworks at Zipaquirá, near Bogotá, are world famous. Hydroelectric potential was developed during the 1970s and 80s. The manufacturing sector of the economy has expanded greatly in recent decades, although it is heavily dependent on imported materials. Beverages and processed foods, textiles, clothing and footwear, and chemicals are the chief products. Tourism is also a sizable source of income.

Oil replaced coffee as the nation’s leading legal export in 1991. Other important official exports include petroleum-related products, coal, nickel, emeralds, apparel, bananas, and cut flowers. Cocaine is the major illicit export, accounting for about 25% of foreign exchange earnings. Once most of the raw materials were grown in Peru and Bolivia, but cultivation has increased in Colombia as a result of those nations coca-eradication programs. The drug trade (Colombia also produces heroin and grows cannabis) has brought riches to some, but has seriously disrupted the fabric of Colombian society with its violence. Industrial and transportation equipment, consumer goods, chemicals, paper products, fuels, and electricity lead Colombia’s imports. The United States and Venezuela are the chief trade partners.”

Twenty five percent of foreign exchange earnings are made from cocaine? It will be fun to see the evolution of this ETF.

See the video from the interview here: A Potential Columbian ETF On The Horizon

Editors note: Global X Management Company already has a Columbian ETF the Global X/InterBolsa FTSE Colombia 20 ETF (NYSEARCA:GXG) which seeks to replicate, net of expenses, the FTSE Colombia 20 Index. The fund invests at least 80% of assets in securities that comprise the index.

Disclosure: No positions