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
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

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

Three Latin America Markets to Beat the BRICS

Stock-Markets / Emerging Markets Feb 01, 2011 - 08:24 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleMartin Hutchinson writes: The stock exchanges of Colombia, Peru and Chile agreed last November to merge their trading, giving international investors access to roughly 600 stocks - more than any single country in Latin America.

Earlier this month, the trio demonstrated just how serious they were, with the Peruvian and Colombian stock exchanges entering into a full-blown merger agreement. These are the three best-run countries in Latin America, with a combined gross domestic product (GDP) of more than $500 billion.


If they get their act together, it'll be these three countries - and not Brazil, that much-ballyhooed "BRIC" country - that are the "must-have" havens for our money.

Let me show you why...

Global Investing Intelligence
As Money Morning readers well know, I have recommended Chile a number of times. And with good reason: In this period of high commodities prices, I continue to believe that this is the most attractive of all emerging markets.

And Colombia and Peru share many of Chile's strengths. Both countries have benefited enormously from the zooming surge in commodities and energy prices.

Peru is a commodities bonanza, with major potential in everything from gold to fish. Colombia, on the other hand, is already a significant oil exporter. And in recent years the country has caused the curve of its oil production to turn sharply upward - it produced about 760,000 barrels a day in 2010, and production is increasing at about 10% annually.

Each of the three countries is larger than any country in the European Union (EU), but their total population is relatively modest at 92 million. Total GDP was $528 million in 2009, but growth is rapid: Colombia grew at 4.4% in 2010, Chile at 5.1% and Peru at an extraordinary 8.7%. While all three countries have excellent relations with the United States (Chile has a free-trade agreement and Colombia has negotiated one subject to ratification by the U.S. Congress).

Also worth noting: China is active as an investor in all three countries, especially Peru.

The real secret to the success of these three countries is that they are competently run and have kept their public sectors under control. Chile, for example, has a public sector (as a share of GDP) that's about half the size of Brazil.

The three countries adopted their current free-market philosophies after traveling admittedly different routes.

Chile established free-market institutions under the dictatorship of late President Augusto José Ramón Pinochet, who took advisers from the University of Chicago. Peru got the free-market religion in the 1990s, after a period of socialism had run the economy into the ground. And Colombia, while subject to high levels of armed conflict, has always been primarily free-market in orientation.

The fact that these three countries each have a predominantly free-market outlook enables them to work together - even as neighboring countries such as Venezuela, Bolivia and Ecuador have relapsed into socialism and increasing poverty.

The big question for investors is whether the countries' free-market orientation will be maintained. The outlook is the most solid in Chile, where the social democrat government that left office in March 2010 was quite market oriented, and the new government of President Sebastian Piñera is even more so.

In Colombia, a free-market government led by Alvaro Uribe has been replaced by another free market government led by Juan Manuel Santos, in office until 2014.

In Peru, the outlook was cloudy at the time of the last election in 2006. But the prosperity that the country has seen since then has improved matters. Three of the four leading candidates for the April 2011 presidential election are free market in outlook; should one of these candidates win, the collaboration with Colombia and Chile can be expected to continue.

The main gain for the three countries from working together is the ability to achieve economic scale.

"MIST" Opportunities
Jim O'Neill, the head of asset management at Goldman Sachs Group Inc. (NYSE: GS), who coined the BRIC acronym in 2001, recently coined another acronym: "MIST," for Mexico, Indonesia, South Korea and Turkey. To create the MIST list, he included countries that he considered to be both "growth markets," and large enough, with output above 1% of gross world product (GWP), to have the "scale" to interest the largest companies and institutions.

Combined, Colombia, Chile and Peru have GDP of about 1% of the world's total, so if they can persuade investors that they really do represent a single bloc, they will attract a renewed flow of both direct investment by big companies and portfolio investments by the largest institutions.

The stock market merger that I outlined above is the first - and easiest - way for them to cooperate. And it should bring in a flood of new money once it's completed.

Currently, while mining companies will invest in the three countries to sell to world markets, manufacturing companies are less interested because local markets are so small and inefficiencies are inevitable. If, over the long term, the countries could form an actual "common market," their economies and living standards would benefit enormously.

In the short term, even without further integration, all three countries have excellent growth prospects. U.S. individual investors wishing to venture there will find a limited selection (though Chile has a dozen U.S.-listed companies).

For me, these three guys beat the much-hyped BRIC (Brazil) hands down.

There's a lesson to be learned here: Better management wins for countries, as well as for companies.

Actions to Take: The stock exchanges of Colombia, Peru and Chile agreed last November to merge their trading, a move that will provide global investors with access to more stocks than any single country in Latin America.

If they get their act together, it'll be Colombia, Peru and Chile that become the next "must-have" havens for our money in Latin America.

And here's the best point of all: You don't have to wait until this merger is finished to profit from the powerful trends I've described - you can invest in each of the countries on an individual basis right now - putting yourself ahead of the masses that are certain to rush in once the market merger is completed.

To do that, take a look at the following three profit plays:

•The iShares MSCI Chile Investable Market Index Fund (NYSE: ECH), an exchange-traded fund (ETF) that gives you broad exposure to the MSCI Chile Index. At $950 million, this ETF is large enough to be efficient. But it is a tad expensive, given that it's trading at a current Price/Earnings (P/E) ratio of 28.
•Ecopetrol SA (NYSE ADR: EC), Colombia's principal oil company, responsible for about half of that country's rapidly expanding oil output. Again, it's a bit expensive, with a P/E of 30 on trailing earnings. But it's trading at only 16 times forward earnings for 2011. And it pays a 2.8% dividend.
•Companhia de Minas Buenaventura SA (NYSE ADR: BVN), Peru's largest precious-metals-mining company, which also mines lead, zinc and copper. This ADR trades at 16 times trailing earnings and only 11 times prospective earnings and pays a modest dividend.
[Editor's Note: As our continued coverage of the run-up on commodities prices (which Martin Hutchinson mentioned several times in today's column) underscores, U.S. consumers can essentially count on seeing $150-a-barrel oil - perhaps as soon as mid-summer. A price increase of that magnitude could result in $5 a gallon gasoline. But here's the thing ...

You don't have to be a victim.

If you follow our lead, you'll be among the small group of investors who make a great deal of money in the crude-oil market this year. You'll have to learn the "new lay of the land," and learn to invest wisely in the face of potential whipsaw volatility. But a balanced approach of exchange-traded funds (ETFs) and individual company shares will enable you to navigate this storm - to find the welcome port on the other side.

To find out more about this opportunity, check out the "2011 Investor's Forecast" issue published by our monthly affiliate newsletter, The Money Map Report. The article, titled "$150 Oil: It's Coming. So Here's How to Make the Most Money," was written by global-energy guru Dr. Kent Moors, and contains a number of specific stock and ETF recommendations.

If you are already an MMRsubscriber, you already have this issue in hand, and can access this report by Dr. Moors by clicking here and then using your password. The article begins on Page 11 of the "Forecast" issue.

Money Morningreaders who are interested in finding out more about our forecast issue can do so by clicking here.

Look at it this way: With oil at $150 a barrel and gasoline at better than $5 a gallon, the profit potential is immense. Just one winning profit play will offset the cost of the subscription - many times over.]

Source : http://moneymorning.com/2011/02/01/...

Money Morning/The Money Map Report

©2011 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 72 hours 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