Stars Continue To Align For Colombia ETFs
As investors that follow Latin America know, Standard & Poor's recently restored Colombia's investment grade rating. Fitch and Moody's Investors Service previously said they would consider upgrading the emerging South American titan later this year. So there are a couple of notches in the respective belts of GXG and COLX. Remember, only Brazil and Mexico had investment grade ratings prior to Colombia getting the nod from S&P.
Last week, Morgan Stanley upgraded GXG in its emerging markets model to “neutral” from “underweight” while lowering its rating on the iShares MSCI Brazil Index Fund (NYSE: EWZ) to “equal-weight” from “overweight.”
And as we've been mentioning, the iShares MSCI Peru All Capped Index Fund (NYSE: EPU) is a mess right now, so GXG and COLX are certainly looking like best of breed when it comes to Latin America ETFs.
With good reason. While not to be confused with Australia or South Africa when it comes to gold production, Colombia is at least among the second-tier of the world's major gold producers, so record gold prices lend support to GXG and COLX. Coal is also a major industry in Colombia, yet no one seems to be mentioning that commodity's potential impact on the Colombian investment thesis.
Not to mention coffee prices are sitting near record levels and Colombia produces roughly 10% of the world's coffee.
For those that need a little technical motivation, GXG's chart is showing signs of a breakout. With last week's move above $21, there is now little in the way of resistance to prevent the ETF from reclaiming its split-adjusted high at $23.75.
Indeed, these are good times for Colombia and its ETFs.
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