One Latin American ETF to Keep an Eye on
This article was originally published on ETFTrends.com.
When it comes to identifying ETF opportunities within the Latin Americas, most investors will have an innate predilection to target the countries with the largest GDPs--Brazil, Mexico and Argentina, but one country that can't be overlooked is Chile and its corresponding ETF-- iShares MSCI Chile Capped ETF (ECH) .
ECH tracks the investment results of the MSCI Chile IMI 25/50 Index--a free float-adjusted market capitalization index designed to measure broad-based equity market performance in Chile. Technical and economic factors will weigh heavily on how this ETF will perform in the upcoming months, but if positive circumstances continue to fall in its favor, ECH could get the attention it may deserve.
Gap Between Price and 50-Day MA Narrowing
Based on Yahoo! Finance performance figures, ECH is down 10.03% year-to-date, but up 12.73% the past 12 months and 8.61% the past three years. Despite being in the red YTD, the gap between its 50-day moving average and price is starting to narrow--a possible sign that it could break through its average and make a run back into the green before the end of 2018.
Growth Forecast Raised
Per a report from Reuters, the Chilean government has upped the ante on its economic growth projections for 2018 with a forecast of 3.8% versus a previous forecast of 3.0%. Chile's government cited increased domestic demand, sloughing off long-term impacts of trade wars between the United States and China.
Chilean economist Felipe Larrain recently told the Chilean parliament and senate’s budgetary committee that he is forecasting an increase in inflation to 2.9% this year versus initial forecasts of 2.8%. Furthermore, domestic demand is up 4.8% as opposed to a previous 4.1%.
Larrain also noted that the national currency, the peso, is set to average 631 pesos per dollar in 2018. Furthermore, Chile, a major exporter of copper, expected the trade war between the global economic powers to only have a short-term impact on the price of copper, which Larrain predicted would rise from to $3.12 a pound versus an earlier forecast of $2.88.
Real Estate Market Growing
Real estate market growth can be a major driver as to whether a country's economy can thrive or lag. The Global Real Estate Transparency Index (GRETI) is a report that contains the most comprehensive country comparisons of data availability, governance, transaction processes, property rights and the regulatory/legal environment around the world.
In the latest Global Real Estate Transparency Index (GRETI) report, Chile jumped 10 spots to the claim 52nd place. Chile even skipped past Argentina, which boasts a larger GDP in comparison.
If the aforementioned factors can continue to move in a the right direction, ECH could stand to benefit and is one that ETF investors should watch closely.
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