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.''

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.