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Colombia May Begin Easing Stock Controls

By James Attwood

Aug. 20 (Bloomberg) -- Colombia is moving towards lifting capital controls on foreign equity trading after the peso's 14 percent depreciation from a mid-June high, Citigroup Inc. wrote.

The government is studying a regulation that would remove restrictions on stock investments in a bid to win an investment- grade debt rating, Portafolio newspaper reported yesterday, citing President Alvaro Uribe.

The ``interview brings Colombia one step closer to lowering controls for equities, if not for fixed income investments,'' Citigroup strategist Geoffrey Dennis wrote in a note to clients today. The peso's fall against the U.S. dollar ``also makes a move to lower capital controls more politically palatable.''

The Finance Ministry in April raised deposit requirements on new investment from abroad, such as bond and stock purchases, to 50 percent from 40 percent. Foreign investors must make the deposit with the central bank for six months, or pay a fee.

The MSCI Colombia index has declined 2.1 percent this year, compared with a 13 percent retreat for the MSCI Latin America index.

By tasco66 on Aug 21, 2008, 05:24 in Friendly Talkzone.

tasco66 says on Aug 22, 2008, 07:34:

Colombian Stocks Deserve `Closer Look' on Rates, JPMorgan Says

By Michael Patterson

Aug. 22 (Bloomberg) -- Colombian stocks deserve a ``closer look'' because President Alvaro Uribe may ease restrictions on equity trading and the central bank will begin cutting interest rates in the first quarter of 2009, JPMorgan Chase & Co. said.

Colombia's equities are trading at an ``attractive'' valuation of 8.9 times estimated 2009 earnings, JPMorgan's Latin America equity strategy team wrote in a research note dated yesterday. They recommended shares of Almacenes Exito SA, saying Colombia's biggest retailer is ``the most geared to the domestic economy and potential removal of capital controls.''

The Colombian government is studying a regulation that would remove restrictions on foreign equity trading in a bid to win an investment-grade debt rating, Portafolio newspaper reported this week, citing Uribe. Colombia's central bank left borrowing costs unchanged this month as policy makers bet 16 interest-rate increases in the past 28 months are enough to stem inflation.

``It is time to take a closer look at Colombia,'' the JPMorgan strategists wrote. ``With the monetary tightening cycle apparently over, it could be the first Latam country to cut rates. Near-term removal of capital controls is a possibility.''

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