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Health & Fitness

International Investing - Argentina vs Germany

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surrounding – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside of the United States that you might not hear about usually.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

Update: With the World Cup final match finally set and ready to go, the showdown between Germany and Argentina should be a fantastic display of conversation. With that in mind, let’s take a look at the economies of the two countries that will be battling over this upcoming weekend.

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Germany

Germany, once dubbed the so-called “sick man” of Europe due to the arduous and often painful process of reintegrating East Germany and West Germany after the fall of the Berlin Wall, has rebounded in spectacular fashion. Widely considered to be the center of growth in Continental Europe, Germany has been the at the center of negotiations regarding the various mechanisms that have been put forward as a way to stabilize the Eurozone economy as a whole. Led by high quality exports and a highly developed service sector, the German economy has been one of the few bright spots in Europe since the global recession 2007-2008.

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A few of the benefits of investing in Germany are easy to see. Germany is one of the world’s largest economies – ranked in the top 10 in both nominal size and exports, and with this size comes stability that is favorable towards investment. The highly educated workforce that is present in Germany is the envy of many countries around the world, and is another benefit for foreign investors looking to gain a reasonable return. A highly developed national infrastructure and logistical framework, as well as a world class financial system are other benefits that make investing in Germany an attractive option for domestic investors looking to put funds to work overseas.

When looking at investing in Germany there are two primary ways to go about it – ADR’s or direct purchases. An ADR, basically, is a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from German stock exchanges if your broker offers those services to its retail investor base (you and I).

Some of the largest German firms available for the investment via ADR are Deutsche Bank, Deutsche Telekom AG, Siemens AG, BASF SE, and E.ON AG. While most of these are well known, two might not be household names – E .ON is one of the world’s largest energy conglomerates, and Deutsche Telekom is the parent company of T-Mobile (definitely a well known firm in the U.S.)

Obviously, there are a lot of high quality companies and opportunities to consider if you are thinking about investing in Germany.

Argentina

Argentina is normally associated with beautiful scenery, fantastic cultural activities, and wonderful food. If your analysis of the country ended with that preliminary analysis, it would be woefully incomplete. Argentina has a somewhat checkered history with the international debt community. During the later 1980s and 1990s the nation suffered from bouts of extreme inflation and economic turmoil that eventually resulted in a default on the nations sovereign debt – causing billions in losses for international investors.

Following the tech bubble (and bust) of 2001 the nation’s government has been very proactive in trying to stimulate economic growth and development. There are several reasons why Argentina, despite its history of economic instability, is drawing international investors once again. A full member of Mercosur, a regional trade agreement, grants the nation preferential treatment regarding tariffs to a market of 275 million people that has a nominal GDP value of $3.5 trillion. A diversified and well-balanced economy, high investments by both government and private investors, and a strong export based economy are also reasons why this country is attracting the attention of the international investing community.

When looking at investing in Argentina, there are two primary ways to go about it – ADRs or direct purchases. An ADR is basically a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps to cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from Argentinean stock exchanges if your broker offers those services to its retail investor base (you and me).
Some of the largest and most liquid ADR’s that are available for investors to utilize in order to invest in Argentina are TEQ (Telecom Argentina S.A.), TGS (Transportation de Gas del Sur S.A.), TS (Tenaris S.A.), and BMA (Banco Marco S.A.). For investors that are seeking to invest in an ETF that is solely dedicated to tracking the Argentinean economy, ARGT (FTSE Argentina 20 ETF) is the most liquid and well-known option.

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