Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Fantastic Investor Ground Floor Opportunity

Companies / Emerging Markets Jun 04, 2013 - 02:52 PM GMT

By: Money_Morning

Companies

Martin Hutchinson writes: Investors should be very excited.

Because it's only once in a very long time that investment watersheds like this happen and you can get some long-term positions at stunning bargains.

Last week Mexico, Chile, Colombia and Peru deepened their "Pacific Alliance" by removing tariffs on 90% of the trade between them, beginning July 1.


Now, there have been many such bilateral trade deals, most of them only moderately important at best. But this one is different.

This one marks the emergence of a genuine investment opportunity in Latin America that isn't Brazil and isn't doomed to collapse within a few years.

For anyone looking for alternatives to a U.S. market that looks increasingly pricey and vulnerable - and that should be you, if it isn't already - you can't miss this opportunity.
Free and Brave vs Weak and Scared

Latin America has increasingly separated itself into two groups, those that believe in free markets and those that don't.

On one side you have Venezuela, which runs a socialist state on the back of oil revenues, and Argentina, defaulting on its debt, increasingly impoverished and inclined to nationalize foreign investment. Smaller countries like Bolivia, Ecuador and Nicaragua have joined this group.

Brazil may have looked like a winner in 2007-10 but in reality is solidly also a member of this group since Lula came to power in 2002.

On the other side you have Chile, free market since Augusto Pinochet's 1973-90 dictatorship, but lonely for a long time. More recently, Colombia became a free market under Alvaro Uribe (2002-10) and has more or less continued under Juan Manuel Santos since 2010.

More surprising, Peru's Ollanta Humala had campaigned as a leftist in 2011 but since his election has governed as a moderate free marketer, albeit with a special (and justified) focus on the needs of Peru's indigenous peoples.

Finally Mexico, which had seemed lost to free markets even under the 12-year center-right rule of Vicente Fox and Felipe Calderon, has moved sharply in a free-market direction under its new President Enrique Pena Nieto, even though he's a member of the traditionally obscurantist PRI.

Among them, the four economies have a population of 208 million and a GDP of $2 trillion - both larger than Brazil. In addition, other countries such as Panama and Honduras have applied to join the Pacific Alliance, and I wouldn't mind betting that Paraguay and Uruguay think hard about it, since their own Mercosur alliance isn't going anywhere - it's dominated by Brazil and Argentina and now includes leftist Venezuela.
Pacific to Proactive

The new agreement, signed in Cali, Colombia on May 23, will allow the four countries to increase trade among themselves, currently less than 5% of their total trade, and to use each other's trade treaties to export to third countries.

Chile has a particularly good set of trade treaties and the Colombian newspaper Diario has suggested a list of products such as pineapple products and glassware which Colombia will be able to export to Chile for further processing and re-export to Asia. It doesn't hurt either that Peru, Colombia and Chile have integrated their stock markets and Mexico is working on joining them.

To that end, a great first-stop for investors interested in Chile is AFP Provida SA (NYSE: PVD) the Chilean leader in the management of privatized pension funds, with operations in Ecuador, the Dominican Republic and, most interestingly, Mexico.

It currently trades at only 6.4 times trailing earnings, with a dividend yield of 11.5%, but that partly reflects a bullish 2012 in Chile. Still, it's a very attractive entry in a business that could grow a lot further in the other Alliance countries and elsewhere.

All four countries have decent growth this year, and none of them have major financial problems. Colombia, Peru and Chile are all resource rich, while Mexico is increasingly competitive in manufacturing as Chinese costs rise.

While these four countries may individually be too small to throw their weight about, by integrating their economies they should be able to create a strong bloc that will be highly competitive in world markets.

That's why I like Global X FTSE Colombia 20 ETF (NYSE: GXG). It's the leading ETF for the Colombian market, with investments in the major Colombian companies such as Ecopetrol (NYSE: EC), Pacific Rubiales Energy (OTC: PEGFF), and the banks. This is the simplest way into an attractive market with lots of growth potential.

Of the four stock markets, Chile and Mexico are pricey at close to 20 times earnings, according to the Financial Times, but Colombia at 15 times earnings and Peru at 13 times earnings are more reasonable.

Unfortunately, there is no Pacific Alliance ETF - yet (it seems the ETF designers have missed a trick).

Source :http://moneymorning.com/2013/06/04/a-fantastic-ground-floor-opportunity/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules