| Everyone's talking about China. Don't miss | | | | agreements. A Free Trade Agreement (FTA) with |
| the opportunities in the other CHI.. | | | | the US took effect in January 2004 and now |
| | | | 90% of Chile's exports to the US enter duty |
| Yes. Chile with an "LE" not "NA" | | | | free. After a similar trade pact with South |
| | | | Korea last year, exports rose 50%. |
| While the whole region is back in favor with | | | | |
| investors, it seems appropriate to highlight | | | | Current President Ricardo Lagos Escobar is |
| Chile which is the economic star of Latin | | | | under pressure to improve economic growth |
| America. | | | | rates and bring down the stubbornly high 8% |
| | | | unemployment rate. On the positive side, |
| Chile is about two times the size of Montana | | | | inflation and interest rates are low at 2-3%. |
| and has an incredible coastline of 2,650 | | | | Chile has demonstrated fiscal discipline and |
| miles. While only 3% of its land is arable, | | | | enjoys both a trade surplus and a budget |
| it has an amazing variety of climates and | | | | surplus. |
| rich agricultural production. It gained its | | | | |
| independence from Spain in 1810 and has 16 | | | | How to Take Advantage |
| million citizens of which 90% are Catholic. | | | | |
| | | | There are no country- specific ETF's for |
| The Chile story is somewhat similar to | | | | Chile but there is the Chile Fund (CH) which |
| Ireland before its economic takeoff. From | | | | is a closed-end fund managed by Credit Suisse |
| 1978 to 1988, per capita income increased | | | | Asset Management. It is up 53% over the past |
| only $100 to reach $1,510. | | | | year, trades at a 7.7% discount to its net |
| | | | asset value and sports a 4.6% yield. Keep in |
| Next, both a military government followed by | | | | mind that 19% of the fund is invested in just |
| democratically elected governments initiated | | | | one copper company Empresas Copec S.A. and |
| market reforms and opened up the economy. | | | | the annual fee is high at 1.80%. |
| Exports and foreign investment took off and | | | | |
| debt levels came down. Foreign investors in | | | | Another alternative would be the iShares |
| Chile are treated the same as Chilean | | | | Latin America 40 (ILF) which invests in |
| investors. | | | | Mexico, Brazil, Chile and Argentina. It is |
| | | | up an eye opening 67% over the past twelve |
| Chile's Take Off and Steady Growth | | | | months with an annual fee of only 0.55%. |
| | | | Currently, 49% of this exchange-traded fund |
| From 1991-1998 economic growth increased an | | | | is invested in Brazil, 38% in Mexico, 10% in |
| average of 8% and per capita income on a | | | | Chile and 3% in Argentina. |
| purchasing power basis has grown to $10,700. | | | | |
| Since then growth has moderated to a 4-5% | | | | Interested investors might also consider the |
| range but a total Chilean public and foreign | | | | ADR for Banco Santander (SAN) which is an |
| debt at 50% of GDP is very low relative to | | | | excellent bank and a good proxy for the |
| other Latin countries. | | | | overall economy. It is up 42% over the past |
| | | | year and up 11% so far this year. Banco |
| Trade is very important to Chile with exports | | | | Santander is one of the 30 companies in the |
| accounting for 25% of GDP. It is rich in | | | | Chartwell Global 30 Index which is an |
| natural resources (copper, timber, fruit and | | | | alternative to the Dow Jones Industrial |
| fish) and has been busy signing free trade | | | | Average. |