Brazil Infrastructure ETF Builds Up on Stimulus

August 24th at 3:00pm by Tom Lydon

The Brazilian government recently announced the largest-ever stimulus package to increase private investment for the aging infrastructure system. An added boost in spending is in the near future as the country gets ready for the Summer Olympics in 2016.  Investors should note the potential for an investment in the EG Shares INDXX Brazil Infrastructure Index (NYSEArca: BRXX).

“At the center of the new measures will be the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social, or BNDES), providing loans for projects. Besides needed investment in Brazil’s transport infrastructure, the government hopes the measures will help support general economic of about 5% over the next few years,” Joseph Hogue wrote for Emerging Money. [World Cup, Olympics Put Brazil ETF in Focus]

The goal of the investment is to help the country prepare for the 2014 World Cup and the 2016 Summer Olympics. It is estimated that the package should bring in about $66 million to help update old roads, railway and air transportation. [Best Emerging Market ETFs]

The focused country ETF iShares MSCI Brazil Index (NYSEArca:EWZ) is back up about 6% since the stock market has made positive moves. Meanwhile, BRXX has gained about 8.8%and touts a yield of about 4.2%, reports Eric Dutram for Zacks.

EWZ tracks the broad stock market in Brazil and is highly concentrated in commodity focused companies. BRXX focuses in more on utilities and industrials and is a truly diversified play on Brazilian transportation infrastructure.

Some investors may be turned off by the bureaucratic problems within the country and could look at investment in Brazil with skepticism. However,the government is taking steps to  draw more investor interest to the country by dropping the foreign investment taxes.

EG Shares INDXX Brazil Infrastructure Index

Tisha Guerrero contributed to this article. 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Tickers

BRXX EWZ