Colombia Stocks May Rally If Controls End, John Ditierri Says

Colombia Stocks May Rally If Controls End, John Ditierri Says
http://www.bloomberg.com/apps/news?pid=20601086&sid=aBU4vXZ2cu8c
By Eric Martin

April 24 (Bloomberg) -- Colombia is Latin America's most attractive stock market after Brazil and Mexico and may rally as the economy expands and the government considers lifting capital controls, investor John Ditierri said.

The South American nation's shares may rebound from the worst performance in the region this year as the government contemplates removing impediments to foreign investment, according to Ditierri, who helps manage $20 billion at Emerging Markets Management LLC in Arlington, Virginia.

His firm is ``slightly overweight'' Colombia stocks. Before today, the benchmark IGBC Index dropped 12 percent in the past year as the MSCI Latin America index gained 41 percent, Brazil's Bovespa rose 32 percent and Mexico's Bolsa increased 7.6 percent.

For Colombia's economy, ``the turnaround there has been remarkable,'' Ditierri said in an interview yesterday. ``The primary driver up until now has been the improvements in security. People are starting to pay attention to it, but the current capital controls are keeping investors on the sidelines.''

Colombia's vice president last week said the nation may eliminate limits on stock ownership by foreigners. The Foreign Ministry said on April 22 the limits would be maintained to stem gains in the peso. Ending the restrictions may encourage more companies to trade shares and help the stock market grow in proportion to the size of the economy, Ditierri said.

The economy grew at the fastest pace in three decades in 2006 and is estimated to have expanded as much as 7 percent last year.

Buying Ecopetrol

Restrictions on buying and selling of securities have capped Colombia's weighting in the MSCI Emerging Markets Index at 0.4 percent, the smallest in Latin America. Argentina, which also has capital controls in place, accounts for 0.5 percent of the index, a benchmark used by global investors.

Ditierri's firm bought shares of Ecopetrol SA, Colombia's state-controlled oil company and the biggest company by weighting in the benchmark, after the Bogota-based company was listed on the exchange in November. Ecopetrol, whose $2.7 billion initial public offering was Latin America's second-largest last year, has gained 70 percent since it began trading. The stock fell 0.4 percent to 2,375 pesos today.

If the capital restrictions are eased, Ditierri expects Colombia's stock market to grow.

``The security improvement has allowed the economy to regain its footing,'' Ditierri said. ``The release of capital controls over several years hopefully would attract more companies to the stock market to list.''

To contact the reporter on this story: Eric Martin in New York at emartin21 at bloomberg.net.

By sloopskipper on Apr 24, 2008, 13:46 in Friendly Talkzone.