Global cash flow seems to be dominating emerging market shares, and Brazil is right along for the ride, as related stocks and exchange traded funds (ETFs) are rallying.

Fundamentals in favor of Brazil continue to improve while surprising and delighting investors. The future looks bright for the economy, especially if these numbers keep trending in the right direction. Jim Jubak for The Money Show lists some reasons why Brazil is a hot spot for investors, and we tossed in a few others, too:

• With the right mix of policies, Brazil could sustain average annual economic growth of 5% over the next 10 years, according to Goldman Sachs.
• Brazil’s president is being credited with the country’s growth. He has built a foundation of low inflation and sound fiscal policy that has released a tide of investment in Brazil. (Our definitive guide to the BRICs).
• Around mid-2010, Jubak says, the carry trade could begin to unwind and lead investors to pull money out of assets that are currently in favor. But for now, Brazil’s small-caps are benefiting from the carry trade.
• Credit is back to normal levels and the economy is back on stable ground, reports Michael S. Derby for The Wall Street Journal. Brazil’s central bank claims the growth is sustainable, as well.
• The economy has added jobs to payroll and government data indicates companies are hiring workers to meet growing demand for manufactured goods and new homes, reports Isabel Versiani for Reuters.
• Retail sales are up for the fourth month in a row. Sales rose 4.7% in August from a year ago, report Joshua Goodman and Adriana Brasileiro for Bloomberg. Domestic demand indicates that continued economic support will continue.
• In 2010, Brazil’s economy is expected to grow 4.4%; this year, growth is expected to be around 0.12%. (How to play Rio’s Olympic win).

For more stories about Brazil, visit our Brazil category.

• iShares MSCI Brazil (NYSEArca: EWZ): up 117% year-to-date

• Market Vectors Brazil Small Cap (BRF): up 86.7% since inception

Tags: Asset Class ETFs, Brazil, BRF, Emerging Markets, EWX, Global ETFs, Latin America, Small-Cap