Having long been
bullish on Colombia
and the Global X FTSE Colombia 20 ETF (NYSE:
), it is heart-warming to know that one more catalyst has arrived
to potentially drive the largest Colombia-specific ETF
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
These days, Colombia is becoming known for
more legitimate exports
including oil and precious and industrial metals. GXG's largest
holding is Ecopoetrol (NYSE:
), 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:
), the king of all South America ETFs. GXG has also sharply
outperformed the iShares MSCI Chile Investable Index Fund (NYSE:
) and the iShares MSCI Mexico Investable Market Index Fund (NYSE:
) 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:
), which is the only country to mix just Chile, Colombia and Peru
together under the umbrella of one ETF. AND is up almost 20%
For more on Latin America ETFs, please click
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