Peru and Colombia – Top Emerging Economies in Latin America

A recent article in The Banker magazine praises Columbia and Peru for their economic growth. In the article On the Brink, author Jason Mitchell writes:

“While the Western world has been struggling through the global financial crisis, Latin America has shown a remarkable resilience to the upheaval. Two countries in particular – Colombia and Peru – are showing particularly impressive growth, and look set to become important emerging economies.

With the prudent macroeconomic policies pursued in Colombia and Peru over the past five years starting to bear fruit, the two countries are set to become much more important emerging markets in Latin America over the course of the next decade.

Both Peru and Colombia are commodity-based economies. Colombia has oil, gold and copper while Peru is blessed with copper, gold and zinc. As the demand for these commodities grew exponentially worldwide in the past few years, these two economies soared. Between 2003 and 2008, the GDP grew at an average of 5.4% and 7% per year for Colombia and Peru respectively.

“According to the IMF, Peru’s GDP was $128bn last year (with a total population of 28 million people), while Colombia’s stood at $240bn (with 44.7 million inhabitants). The two countries have much smaller economies than Brazil and Mexico (at $1570bn and $1080bn, respectively), but are middle-ranking in size, comparable with Argentina and Chile (at $326bn
and $169bn, respectively).”

For US investors, 2 ADRs from Colombia and 2 from Peru are available for investment.

1. EcoPetrol (EC) is an integrated oil producer and distributor of Colombia with operations in Colombia and Northern Peru. EC stock is up about 54% YTD. The stock pays a 5.20% dividend yield. I wrote a post on EcoPetrol when it first listed its ADR on the NYSE last year.For more details go here.

2.BanColombia(CIB) is a full-service commercial bank offering a wide-range of services to its 6.4 million customers in Colombia.The current yield is 2.86%. CIB is up about 75% YTD.

3. Compania de Minas Buenaventura (BVN) is mining company with interests in silver, gold, zinc, lead and copper. The beta is 0.9. Average profit margin is about 51% and last year the company had total revenues of $762M.

4.The Peruvian financial services firm Creditcorp(BAP) is now domiciled in Bermuda. BAP has a dividend yield of 1.94%. The beta is 1.6. Average annual earnings growth in the past 5 years is 34% and the profit margin is about 19%.

Related ETFs:
GlobalX Funds’ Colombia ETF(GXG)

iShares MSCI All Peru Capped Index Fund (EPU)

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