Why Colombia? And Why GXG?

2025-05-16 05:20:00 ET

Summary

• In our view, the combination of discounted valuations and potential growth catalysts position Colombia as an interesting investment opportunity.
• The political pendulum could swing toward the center-right next year, which could spur a return to more orthodox economic policies, potentially pushing valuation multiples higher, similar to what we’ve seen recently in Argentina.
• The potential for a new capital spending cycle and improving corporate governance help to round out the investment case.

Why Colombia?

Deep Value: The MSCI COLCAP Index, which measures the local Colombian equity market, traded at only a 7.9x price-to-earnings (P/E) ratio and 0.9x price-to-book (P/B) ratio with an almost 6.5% dividend yield even after the ~24% year-to-date rally through April 23, 2025.[1] Despite the move, the COLCAP Index is still roughly 17.4% and 14.7% below its respective 10yr P/E and P/B averages![2]...

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