More Good News For Colombia ETF (GXG, AND)


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Having long been bullish on Colombia and the Global X FTSE Colombia 20 ETF (NYSE: GXG ), it is heart-warming to know that one more catalyst has arrived to potentially drive the largest Colombia-specific ETF higher.

For once, the U.S. government did something the right way as the U.S.-Colombia free trade agreement will be implemented on May 15, several months ahead of schedule. Colombia, South America's third-largest oil producer behind Venezuela and Brazil, has long wanted a free trade pact with the U.S., but its dodgy labor record and reputation for drug-related violence previously stood in the way of the trade agreement becoming a reality.

The deal is a boon for the U.S. as well, as it will lift tariffs imposed by Colombia on American farming and industrial products, Reuters reported. The U.S. Chamber of Commerce cheered early implementation of the accord while saying trade between the two nations was $14 billion last year.

In other words, the free trade accord should be good news over the long haul for GXG. Still, for some reason, some folks need some cajoling when it comes to investing in Colombia. The reason is two-fold. First, the country's reputation for kidnappings, rebel violence and nefarious exports, while diminishing, still weighs on the mind of investors. Second, it's hard not to be reminded of those things when every Johnny-come-lately to the GXG party references cocaine and/or Pablo Escobar when talking about the ETF.

These days, Colombia is becoming known for more legitimate exports including oil and precious and industrial metals. GXG's largest holding is Ecopoetrol (NYSE: EC ), Colombia's state-run oil company and one of the best performing oil stocks in the world this year.

That might be one reason, among several, that GXG is up more than 20% year-to-date, more than double the returns offered by the iShares MSCI Brazil Index Fund (NYSE: EWZ ), the king of all South America ETFs. GXG has also sharply outperformed the iShares MSCI Chile Investable Index Fund (NYSE: ECH ) and the iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW ) in 2012.

Beyond the trade pact with the U.S., there's more good news that could bolster the case for being long GXG. Earlier today, Colombia's central bank said that foreign direct investment in the country surged 30.2% in the first quarter to $4.2 billion compared with $3.2 billion a year earlier.

And GXG is worth watching right here, right now as Colombia delivers retail sales and industrial production data on Friday. Industrial production is expected to rise 3.7% from last month's 2.4% jump, while retail sales are expected to climb 4.7%.

Those looking for Colombia exposure with some diversity should consider the Global X Andean FTSE 40 ETF (NYSE: AND ), which is the only country to mix just Chile, Colombia and Peru together under the umbrella of one ETF. AND is up almost 20% year-to-date.

For more on Latin America ETFs, please click here .

(c) 2012 All rights reserved. This material may not be published in its entirety or redistributed without the approval of Benzinga.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Commodities , Economy , ETFs , Futures
Referenced Stocks: EC , ECH , EWW , EWZ , GXG

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