The Cuba Issue

Well this blog is starting to gain a little traction.  I’m working on function first over form so my goal on fully functional is the end of July.

A topic of interest this week is how to invest in Cuba (as a US investor).  There appears to be action afoot to insert some cracks into the 50+ year wall of blockade.  These openings, however, are being created by presidential action which means they could be fleeting (i.e. valid until the next  election), targeted (medical, agricultural or tourist related), and/or limited as executive orders generally can’t override the law.  In this case, applicable law is known as 49/49.  This law generally says a U.S. person may make an investment in a non-Cuban foreign entity that engages in commercial dealings in or with Cuba if:

  1. the foreign entity is not controlled by U.S. persons; and
  2. a majority of the revenues of the foreign company are not derived from Cuba.

With this foundation and with the relative strength of the US dollar, my choice to play this action is through Canadian companies, notably banks.  Just keep in mind that to play in Cuba requires Foreign Exchange exposure today and an eye on potential implications based on foreign tax treaties.

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