Cuba Discounted, But Shut For Tourists, Trade?

January 11, 2016, 1:43 P.M. ET
Cuba Discounted, But Shut For Tourists, Trade?
By Dimitra DeFotis

Cuba can be compared to North Korea in some ways, if you consider
weapons of mass economic destruction.
In a fresh New Yorker article, author Barbara Demick, who has worked as
a foreign correspondent in many developing countries, writes about the
stark lack of basic consumer needs in Cuba, despite reforms under Raúl
Castro since 2006. That's no surprise, in a sense, but she also points
out that things could be better considering that, in the past few years,
the government has moderated rules so that private employment is allowed
in scores of categories, farmers can sell more goods, and residents can
rent rooms to tourists. She writes:

"Cuba has evolved politically, investing in education and health care
rather than weapons of mass destruction. But the economic fundamentals
in these last bastions of Communism are much the same. Like North Korea,
Cuba maintains a distribution system in which citizens pay a low cost
for inadequate rations of staple foods. (At one state shop, the
provisions, listed on the blackboard, were grains, washing soap, bathing
soap, toothpaste, sugar, salt, coffee, evaporated milk, eggs, and oil.)
As in North Korea, archaic laws prevent the private sale of commodities
that have been deemed strategic to the nation. Fishing is limited in
both countries on the grounds that the bounty of the seas is the
exclusive property of the state."

Herzfeld Carribean Basin Fund (CUBA), a closed-end fund partly invested
in stocks that could benefit as the Cuban economy opens up to trade and
tourism. The fund has tumbled 11% so far this year, bringing its
12-month decline to 30%. With today's decline, the Cuba fund is now
trading at a slight discount to its net asset value of $5.88, according
to CEFconnect. The iShares MSCI Emerging Markets exchange-traded fund
(EEM) is down 8.7% year to date, and is down 25% over 12 months. The
iShares MSCI Frontier 100 ETF (FM) is down 5.3% year to date, and has
fallen 21% over 12 months.

See The New Yorker story, "Shopping In Cuba." Also see our recent
Barron's Emerging Markets Daily posts: Cuba Debt Outlook Improved As
Venezuela Ties Fade, Moody's Says and U.S. Removes Cuban Bank Officials
from Blocked List.

Source: Cuba Discounted, But Shut For Tourists, Trade? - Emerging
Markets Daily - Barrons.com -
http://blogs.barrons.com/emergingmarketsdaily/2016/01/11/cuba-discounted-but-shut-for-tourists-trade/