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Colombia ETFs Outperform on Strongest GDP Growth in Two-Years


Colombia country-specific exchange traded funds are outperforming the broader emerging markets as the economy expands at its fastest clip in over two years.

Year-to-date, the Global X FTSE Colombia 20 ETF (GXG) is up 12.1%, Market Vectors Colombia ETF (COLX) rose 14.5% and and the iShares MSCI Colombia Capped ETF (ICOL) increased 10.1%.

In comparison, broad emerging market ETFs like the iShares MSCI Emerging Markets ETF’s (EEM) and Vanguard FTSE Emerging Markets ETF (VWO) are up 5.0% and 6.9% year-to-date, respectively. [Of Rocky Top and Emerging Markets ETFs]

“There are a lot of things going in the right direction,” Ricardo Hausmann, a former Venezuelan planning minister who is now economics professor at Harvard University, said in a Bloomberg article. “In general, the world is decelerating and emerging markets are decelerating this year. Colombia is accelerating.”

Colombia’s government revealed that the economy expanded 6.4% in the first quarter year-over-year, the best first-quarter results since 2007 and overshooting average predictions of 5.1% growth, Reuters reports.

“Internal demand has shown a very good performance, particularly private consumption and investment,” Daniel Velandia, the head analyst at Credicorp’s Colombia unit, said in the Bloomberg article. “This is generating a lot of optimism.”

Consequently, analysts are predicting that the Colombian central bank could raise policy rates tomorrow by at least 25 basis points to combat rising inflation. [Learning to Love LatAm ETFs Again]

The central bank previously adhered an expansionary monetary policy, including a low benchmark rate, to stimulate the. Consequently, the faster growth has lifted inflation from its lowest since 1955.

Additionally, the government upwardly revised its full-year 2013 growth to 4.7% from 4.3%. Finance Minister Mauricio Cardenas is “cautiously” maintaining a growth forecast of 4.7% for this year.

“The country is doing well economically. We’ve managed a recovery in the sectors that were lagging – agriculture and industry,” Cardenas said.

In related Colombia news, the Colombian fútbol team won two to one against the Ivory Coast, or Côte d’Ivoire, at the World Cup, providing Colombian investors with something more to be happy about.

Global X FTSE Colombia 20 ETF


For more information on Colombia, visit our Colombia category.