Emerging LatAm Economies
Investors seeking growth in Latin America often consider Brazil to be the only option. However, this view overlooks the rapidly developing Andean region that includes the economies of Chile, Colombia and Peru. These three countries have enjoyed great success in recent years through implementation of pro-market reforms, reduction of trade barriers and solid political governance that has become a model for the region. Furthermore, the Andean nations are key producers of commodities such as oil, copper, gold, natural gas and coffee, and have been using these natural resources to develop trade agreements and direct investment from major economies like the U.S. and China. The Global X FTSE Andean 40 ETF (AND) provides investors with an option to diversify their Latin America exposure and gain access to some of the most dynamic economies in the region.
Trade and Investment Growth
Export Growth - Total exports by Andean nations increased from $30 billion in 2003 to $135 billion in 2013, a compound annualized growth rate of 16.35%. At $40 billion, the US was the recipient of 29% of these exports. In addition to their trade agreements with the US, Colombia and Peru have entered into a free trade deal with the EU. This deal will reduce tariffs between the two regions and is expected to lead to a more transparent and predictable business environment. (Source: International Trade Centre 2014, European Commission 2013)
Pacific Alliance - The Andean nations, along with Mexico, founded a trading bloc designed to eliminate 90% of merchandise tariffs between its members.The remaining 10% are proposed to be removed by the end of the decade. The bloc also agreed to abolish the need for business or tourist visas, to facilitate easy travel for citizens between these nations. Costa Rica has stated its intent to join this alliance as well. (Source: BBC News 2013, Pacific Alliance, 2014)
Credit Worthiness - The Andean nations have high credit worthiness. Chile, with an S&P foreign currency rating of AA- is the highest rated nation in Latin America while Peru has a rating of BBB+ and Colombia that of BBB. These countries all have received a stable outlook on their ratings by S&P. (Ratings by S&P, Source: Bloomberg, S&P, 2014)
Ease of Doing Business - The World Bankís "Ease of Doing Business" indicator, ranked Chile, Peru and Columbia higher than any other South American nations in 2013, based on factors such as investor protection, access to credit, and international trade. (Source: World Bank, 2014
 
 
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DISCLOSURE
Investing involves risk, including the possible loss of principal. International investing may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments may be subject to higher volatility.
The information presented here is for informational purposes only. It was prepared on information and sources that we believe to be reliable, but we make no representations or guarantees as to the accuracy or the completeness of the information contained herein. This information is not intended to be individual or personalized investment or tax advice. Please consult a financial advisor or tax professional for more information regarding your tax situation.
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