The Shifting Colombian Equity Story: From Near Failed State To Strong Fundamentals?

Tuesday, Aug 31 2010 by
The Shifting Colombian Equity Story From Near Failed State To Strong Fundamentals

As allegedly reported by the media and with a common perception of being a nation of rich in drug peddling, abductions and murders, the Republic of Colombia has undergone a remarkable transformation over the past decade. Colombia has been fighting to prove that it is a safe and worthwhile investment destination and has now put itself firmly back onto the investment map. Transforming itself from the Drug capital of the world to a nation attracting strong foreign investment in recent years, Colombia's strong fundamentals stand out. Not only has Colombia been recognized as one of the best pro-business reformers globally in recent years by the World Bank, the country's $130 billion economy, a world leader in the production of coffee, petroleum, textiles, and flowers, is growing at 6.8% a year, two full points faster than the Latin American average. Colombian economy has experienced tremendous growth, benefiting from a commodity boom and sound policies that stimulated growth. The Colombian economy is arguably the largest in Latin America after Brazil, Mexico and the forever in transit economy of Argentina, with one of the largest deposits of oil and natural gas deposits in Latin America.

The lush green tropical jungle country of Colombia has one of the largest deposits of green gem emerald mostly exported to jewelry producing nations. Named after Christopher Columbus by the South American liberator Simon Bolivar, the modern day Colombia continues to be a dark spot on their investment horizon or some investors. Even though, the country's notorious past acts as a speed breaker preventing foreigners from investing in this Latin American nation, the fact is that every indicator of violence in Colombia including homicides, kidnappings, and acts of terrorism have declined significantly over the past eight years.

• Terrorist acts are down 84% from 2002.
• Homicides have dropped 45 percent from 2002 through 2009 – the lowest homicide rate in 22 years.
• Kidnappings have dropped significantly, down 88% from 2002, also now at the lowest rate in 22 years.
• Today Colombia has a lower violent crime rate than many major U.S. cities.

Far from being a dangerous place to even visit, leave alone considering any thoughts of investment, Colombia is slowly but surely transforming itself into a Latin American success story with its free-market approach to its economy.

  • According to Bloomberg data, Colombia is forecast to attract about $10…

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5 Comments on this Article show/hide all

Mattybuoy 31st Aug '10 1 of 5

There are a boatload of E&P companies operating in Colombia.

Here is a list (might not be totally up to date):-

Alange Energy Corp (ALE: TSX-V)
Amerisur Resources (AMER:AIM)
Azabache Energy Inc. (AZA: TSX-V)
Benchmark Energy Corp. (BEE: TSX-V)
Brownstone Ventures Inc. (BWN: TSX-V)
C&C Energia Ltd. (CZE: TSX-V)
Canacol Energy (CNE-TSX-V)
Global Energy Dev’t (GED: AIM)
Gold Oil (GOO: AIM)
Gran Tierra Energy (GTE: TSX)
Houston American Energy Corp. (NASDAQGM: HUSA)
Interoil Exploration and Production ASA (IOX: NOK)
Kinetex Resources Corporation (KTX: TSX-V)
La Cortez Energy (LCTZ: OTC)
Loon Energy (LNE: TSX-V)
Maurel & Prom (MAU: FR)
Pacific Rubiales Energy (PRE: TSX)
Parex Resources Inc. (PXT: TSX-V)
Petro Andina Resources Inc. (PAR: TSX)
Petroamerica Oil Corp. (PTA: TSX-V)
Petrodorado Ltd. (PDQ: TSX-V)
Petrolatina Energy (PELE: AIM)
Petrolifera Petroleum (PDP: TSX)
Petrominerales (PMG: TSX)
Petro Vista Energy (PTV: TSX-V)
Quetzal Eenrgy (QEI: TSX-V)
Suroco Energy (SRM:TSX-V)
Talisman Energy (TLM:TSX)
Woburn Energy (WBN: AIM)

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World market Pulse 14th Sep '10 2 of 5

Thanks MattyBuoy

We actually covered companies and ETFs that directly are related to the country. Obviously there are many other stocks and companies that are significantly invested or associated with Colombia.

Thank you for the list anyway.

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StrollingMolby 14th Feb '11 3 of 5

Interesting Columbia development I note today with China making an advanced proposal to build another rival to the Panama Canal by way of a rail link from the Pacific to the Atlantic to a new city where imported Chinese goods would be assembled for re-export throughout the Americas. And possibly of more significance, Colombia-sourced raw materials would make the return journey to China. Priority would be given to coal destined for China.

May be worth analysing Columbian coal stocks for any price increases arising, especially amongst thse in close proximity to the line.

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djpreston 14th Feb '11 4 of 5

Thats an interesting angle Matty, worth further investigation Id say.

FWIW, My own Columbian E&P portfolio is the very dull mix of:

PRE (added just recently)

Fund Management: European Wealth
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Mattybuoy 15th Feb '11 5 of 5

Does anyone else think that China's shortage of coal affects the oil price?

I have read that one reason for the prevailing high oil prices is that a lot of Chinese industrial facilities burn diesel in large quantities in generators because the power stations simply can't get hold of enough thermal coal to make grid electricity, at any price.

Just an aside ... I guess Colombia wins both ways :-)

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