Direct foreign investment into Brazil’s economy is forecast to increase 47% this year, but many are beginning to broach the “B” word – Bubble. Brazil is going to host the World Cup in 2014, the Summer Olympics in 2016, the middle class is exploding and GDP has tripled since 2003. The country’s planning minister expects the economy to grow 6% this year. You can see what’s so appealing about Latin America’s largest country. [Our Guide to the BRICs.]

Last year, international investors added $11.4 billion to their stock holdings, the most since records began getting kept in 1994, says  Joshua M. Brown for The Faster Times. Many believe the money will keep coming beyond 2010, too. [Brazil ETF Shows Is Might.]

The thing about bubbles is that you never know for sure whether it is one until it pops. Whether Brazil is in a bubble or not, you can protect yourself by first learning to spot the signs of a bubble, then implementing a trading strategy that incorporates a stop loss. Ours is set at 8% – high enough that we’re not in and out frequently, low enough to have a limit on losses. By having a point at which you get out, you can participate in any potential long-term uptrend resting assured that your risk on the downside is capped. [How to Spot and Avoid Bubbles.]

For more stories about Brazil, visit our Brazil category.

• iShares MSCI Brazil (NYSEArca: EWZ)

• Market Vectors Brazil Small Cap (NYSEArca: BRF)

• WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF)

According to Fitch Ratings, global infrastructure and project finance rating outlooks in 2010 for most sectors are stabilizing and improving, writes Brian Bertsch for RiskCenter. The outlook is dependent on the anticipated gradual global economic recovery through the year. [Why 2010 Could Be Infrastructure's Year.]

Other interesting points noted by Fitch include:

• Infrastructure assets with structurally low volatility, like availability payment structures for social infrastructure or transportation, and contracted power and energy assets, have remained relatively stable.
• Companies with considerable market exposure, including merchant power, and those engaged in discretionary spending like airports, maritime ports and pub companies, have been negatively impacted. [Infrastructure ETFs: The Consequences of Not Spending.]
• The speed of the economic recovery and inflation, along with the disparity between revenue and cost growth, will determine credit quality. Additionally, the volatility of commodity prices will affect energy and transportation projects. Counterparty risk still remains a factor.

Investors should keep an eye on how infrastructure assets in developing economies perform compared to those in developed economies. Emerging markets have shown strength during and after the financial crisis, and they are expected recover faster than developed markets.

In the last few months, the number of infrastructure ETFs has ballooned from a few broad ones to six such funds that range from all-encompassing to a fine-tuned focus on single countries. You can spot opportunities in these funds by watching the 200-day moving average (or waiting until a 200-day moving average has been established in newer funds). [Read More About Trend Following in The ETF Trend Following Playbook.]

For more information on infrastructure, visit our infrastructure category.

• SPDR FTSE/Macquarie Global Infra 100 (NYSEArca: GII)
• PowerShares Emerging Markets Infrastructure (NYSEArca: PXR)
• iShares S&P Global Infrastructure Index (NYSEArca: IGF)
• iShares S&P Emerging Markets Infrastructure (NASDAQ: EMIF)
• Emerging Global Shares INDXX China (NYSEArca: CHXX)
• Emerging Global Shares INDXX Brazil (NYSEArca: BRXX)

Max Chen contributed to this article.

Mexico may not have as many fans as Brazil, but its economy is no slouch. A few reasons why Mexico may be just as fertile as Brazil are given by Lara Crigger at Index Universe:

• Its resilient, export-driven markets have thrived in the post-NAFTA years, and year-to-date, Mexican stocks have already outperformed those in the United States—and even Brazil.
• This diverse economy, with its rich natural resources and manufacturing sector, offers investors a different take on the Latin American story. [Our Guide to the BRICs.]
• With 111 million citizens, Mexico is among the 10 largest economies in the world, according to Zeihan, and the second-largest Latin American economy after Brazil.
• The government now predicts 3.9% GDP growth for 2010, with the possibility of further increases in estimates.

Clifford Krause and Elisabeth Malkin for The New York Times report that the national oil company Pemex is now entering a period of turmoil. It turns out that oil production  is sagging so rapidly that Mexico, long one of the world’s top oil-exporting countries, could begin importing oil within the decade. Can Mexico reverse their decline as an oil-producing nation? [A New Approach to Emerging Markets.]

Which do you choose – Mexico or Brazil? You can have both in a broad Latin America fund, or you can choose from the array of single country and sector/asset class-specific ETFs. Both economies have plenty working in their favor – just use the trend lines. [How to Follow the Trends.]

For more stories about Latin America, visit our Latin America category.

• Emerging Global Shares Brazil Infrastructure Fund (NYSEArca: BRXX): recently launched

• iShares MSCI Mexico ETF (NYSEArca: EWW)

• Shares MSCI Brazil Index (NYSEArca: EWZ)

• Market Vectors Brazil Small Cap (NYSEArca: BRF)

• iShares Latin America 40 Index (NYSEArca: ILF): Mexico is 22.5%

There’s been a surge of new emerging market ETFs that give sector-specific pure plays, Jeff Benjamin for Investment News reports. The new indexes coming out now eschew the broad-market approach in favor of capitalizing on opportunities in sectors as they emerge. [Russia ETFs: An Emerging Illusion?]

While this approach is more aggressive and requires more due diligence on the underlying market drivers, the diversification benefits are outstanding. But be aware that while you may be getting more concentrated exposure and flexibility, the tradeoff is increased volatility and risk. [5 Reasons to Consider Brazil ETFs.]

If you’re salivating at the thought of emerging market exposure, but are wary of the risks, consider implementing a simple strategy with a stop-loss. One we suggest is the 200-day moving average with an 8% trailing stop loss. [How to Use a Trend Following Strategy.]

For more stories about emerging markets, visit our emerging markets category.

• Emerging Global Shares Dow Jones Emerging Markets Energy Titans (NYSEArca: EEO)

• Market Vectors Brazil Small Cap (NYSEArca: BRF)

Other newer sector-based funds include:

• Claymore/AlphaShares China Technology (NYSEArca: CQQQ)
  

• Global X China Consumer Fund (NYSEArca:CHIQ)

• Emerging Global Shares INDXX China Infrastructure Index Fund (NYSEArca: CHXX)

Van Eck plans to launch one ETF focused on non-dollar-denominated emerging market debt and another on floating-rate investment-grade bonds, writes  Cinthia Murphy for IndexUniverse. Van Eck is capitalizing on concerns about interest rate hikes by the Federal Reserve. [How to Protect Yourself from a Bond ETF Bubble.]

The Market Vectors Emerging Markets Local Currency Debt and the Market Vectors Investment Grade Floating Rate are now in registration with the Securities and Exchange Commission (SEC). Both funds will utilize derivatives such as options, swaps and futures.

The emerging market debt ETF will try to reflect the performance of an index of fixed-rate sovereign debt, supranational issues and corporate bonds with at least a year to maturity and a minimum value of $100 million. The floating-rate ETF will target investment-grade bonds with at least one year to maturity at the time of each index rebalancing – floating-rate securities don’t lose value when interest rates rise.

ProShares is cooking up some new ETFs for those investors seeking more leveraged and inverse exposure to international markets and regional banks. The list includes seven funds targeting international markets and the U.S. regional banking sector, and the expense ratios for all international funds and the long banking strategy are 0.95%, says Cinthia Murphy for Index Universe. [6 ETFs for a Financial Recovery.]

The new leveraged international ETFs are:

• Ultra MSCI Brazil
• Ultra MSCI Pacific ex-Japan
• Ultra MSCI Europe
• Ultra MSCI Mexico Investable Market

The three regional banking funds are:

• Ultra KBW Regional Banking ETF
  
• UltraShort KBW Regional Banking Fund
• Short KBW Regional Banking ETF

For more information on new ETFs, visit our new ETFs category.

Max Chen contributed to this article.

The Getulio Vargas Foundation (FGV) and the Institute for the Economic Research at the University of Munich have conducted a study and found that Latin America has entered a period of “good” recovery, according to People’s Daily Online.

Latin America registered an Economic Situation Indicator (ICE) of 5.6 in January 2010, compared to 5.2 in October – ICE levels go from one to nine and any figure above a five represents positive economic signals. Latin American countries that registered an ICE above 5.0 include Brazil at 7.8, Chile at 7.4, Peru at 7.3, Uraguay at 7.0 and Argentina at 5.3. [Reasons to Consider Brazil.]

With that, representatives of 32 countries are meeting in Cancun, Mexico in an attempt to create a regional organization that excludes the United States and Canada, reports Tracy Wilkinson for The Los Angeles Times. The new bloc is expected to promote better integration and shared economic development among Latin American and Caribbean countries. [How to Cope with Risks in Latin America.]

For more information on Latin America, visit our Latin America category. If you’re interested in investing in Latin America, take a look at the ETFs below. Narrower funds may give you more pure-play exposure to various countries in the regions, while the broader ones lower your overall risk. [6 Things You're Missing If You Don't Have Global ETFs.]

• iShares MSCI All Peru Capped Index (NYSEArca: EPU)
• Global X/InterBolsa FTSE Colombia 20 (NYSEArca: GXG)
  
• Shares MSCI Brazil Index (NYSEArca: EWZ)
• iShares MSCI Chile Investable Mkt Idx (NYSEArca: ECH)
• iShares MSCI Mexico ETF (NYSEArca: EWW)
• SPDR S&P Emerging Latin America (NYSEArca: GML): Brazil, 66%; Mexico, 20.5%; Chile, 9.7%; Peru, 3.7%
• iShares S&P Latin America Index (NYSEArca:ILF): Brazil, 61.1%; Mexico, 23%; Chile, 10.4%; Peru, 3.3%

Max Chen contributed to this article.

The Brazil Infrastructure Fund (NYSEArca: BRXX) is a play on a slice out of a larger pie: the infrastructure improvements necessary to create and sustain growth in emerging markets. Unlike China, which has already long been working toward improving its infrastructure, Brazil by its own admission has not been giving the issue the attention it deserves. [All About the New China Infrastructure ETF.]

As a result, they’re far behind where they should be, says Richard Kang, Emerging Global Shares’ Chief Investment Officer and Director of Research. In fact, the vice president of Banco do Brasil SA said earlier this month that the country’s projects could require as much as $85 billion in financing over the next 10 years. [Watch Richard Kang's Fox Business Appearance on China.]

For investors, it’s all an opportunity. This is especially true as Brazil preps for two events that will have all the eyes of the world upon the country: the 2014 World Cup and the 2016 Summer Olympics. It’s estimated that World Cup-related projects could require as much as $54 billion in financing. [5 Reasons to Consider Brazil.]

In 2009, Kang visited South Africa, which is hosting the World Cup this year, and improvements to its infrastructure were already evident in the expansion of highways and airports. A similar situation could play out in Brazil as the World Cup and Summer Olympics loom closer.

Kang feels that infrastructure is potentially a long-term theme for investors. “You can’t think of that as a short-term holding, because you’re talking about the growth of a country over time.”

BRXX has 30 names with an average market cap of $11.7 billion. Components include metals and mining, telecom, utilities, water, power producers, transportation and machinery. The expense ratio is 0.85%.

For the latest news about new ETFs, visit our category.

• A growing consumer market and governmental aid have increased merger and acquisition activity in Brazil, reports Elzio Barreto for Reuters. Agribusiness, finance and consumer retail sectors are seeing more takeovers, corporate restructurings and ventures. The largest deal so far this year is the $21 billion-a-year tie-up between Cosan, producer of sugar and ethanol, and Royal Dutch Shell Plc.
• Brazil’s Central Bank stated that the country’s economic rebound is pressuring consumer prices, which many consider a good signal that interest rates might increase no later than April, writes Andre Soliani Costa for BusinessWeek. Some traders are betting that the Central Bank will raise rates by 0.25% to 9% as soon as next month. The Central Bank has projected a 5.8% economic expansion for the year. [Coping with Risk in Latin America.]
• A recent Getúlio Vargas Foundation survey found that there was an upward shift in Brazil’s income levels, according to Isabela Vieira for Brazzil Mag. The Brazilian income tier is looking less like a pyramid and more like a diamond-shape, with a slight contraction at the bottom and a distending middle class.
• Brazilian bank Itau Unibanco Holding SA (NYSE: ITUB), Brazil’s largest private-sector bank, is focusing on domestic expansion, opening 150 agencies across the country this year, reports Rogerio Jelmayer for The Wall Street Journal. Furthermore, the bank expects to expand its credit portfolio by around 20%. Banco Bradesco S/A (NYSE: BBD), Brazil’s second-largest private bank, wants to invest $2.27 billion in its operations this year. Banco do Brazil SA, the country’s largest bank in terms of assets, has also engaged in acquisitions to help maintain its presence as a market leader.
• Better-than-expected soybean production may a decent boost to Brazil’s thriving economy in 2010, comments Nathaniel Parish Flannery for Emerginvest. The Agriculture Ministry expects that Brazil, the world’s second largest soybean producer, could benefit from greater rain fall this year. Brazil’s Finance Minister, Guido Mantega, forecasts an economic expansion of 5.2% in 2010. [Brazil Shows Its Might.]

For more information on Brazil, visit our Brazil category.

• iShares MSCI Brazil (NYSEArca: EWZ)

• Market Vectors Brazil Small Cap (NYSEArca: BRF)

• iShares MSCI BRIC (NYSEArca: BKF): Brazil is 27.4%

• Claymore/BNY BRIC (EEB): Brazil is 52.8%

• SPDR S&P BRIC 40 (NYSEArca: BIK): Brazil 23.9%

Max Chen contributed to this article.

iShares

More single-country ETFs are on the way for iShares, which already touts an impressive list of single-country ETFs. Cinthia Murphy for Index Universe reports that the latest group of proposed funds covers a some areas that are already backed by ETFs, along with some first-of-their-kind funds. [How Being Underallocated Globally Can Hurt You.]

The ETFs are:

• iShares MSCI USA Index Fund: The U.S. fund is a diversified ETF that will essentially be a mid- and large-cap portfolio that tracks an index investing in securities from companies in the top 85% of the domestic space by market capitalization.
• iShares MSCI Brazil Small Cap Index Fund: iShares’ take on Brazil’s small-cap market is perhaps an attempt to replicate the success Van Eck has had in that segment with its version of a Brazil small cap fund, Market Vectors Brazil Small-Cap (NYSEArca: BRF).
• iShares MSCI Egypt Capped Investable Market Index Fund: The Egypt ETF will track an index of 41 companies, with most sector allocations dedicated to financials, industrials and telecommunications services.
• iShares MSCI Ireland Capped Investable Market Index Fund: The Ireland fund’s benchmark held 21 names as of October, and focused primarily on consumer staples, financials and materials.
• iShares MSCI Russia Capped Index Fund: This will track an index that is a variation of the MSCI Russia Index, the MSCI Russia 25/50 Index. While the new fund will invest in the top 85% of Russia-listed companies by market capitalization, it will also take into account investment diversification requirements that apply to regulated investment companies (RICs), under U.S. law. This fund would go head-to-head with the Market Vectors Russia (NYSEArca: RSX).
• iShares MSCI Philippines Investable Market Index Fund: The Philippines ETF will replicate an index of 28 companies, mostly in utilities, telecommunications and financials.

The debuting ETFs focused on Ireland, Egypt and the Philippines could be the first country-specific funds available to U.S. investors for each of those economies . To be the first ones to market, iShares will have to beat PowerShares, State Street, Van Eck and Global X. PowerShares and State Street have an Ireland fund in registration; Van Eck and Global X have filed for Egypt ETFs. Global X also plans a Philippines fund.

For more stories about new ETFs, visit our new ETFs category.

Angel Gurria, Organization for Economic Cooperation and Development (OECD) chief, said that there’s “a danger of asset bubbles in places like Brazil… and we should be careful about that,” as stated in MecroPress. The statement came as investors also noticed the risk and began funneling more than $500 million out of the Sao Paulo stock market in January. [How to Cope with Risk in Latin America.]

Brazil’s currency, the real, has also depreciated to its lowest point against the U.S. dollar since Sept. 2, 2009. Brazilians officials are actually satisfied with the depreciation since a stronger dollar helps competition and promotes Brazilian exports.

Finance Minister, Guido Mantega, believes that the economy is stable enough to begin withdrawing stimulus measures. With consumption and exports on the rise, the Brazilian government is estimating an economic growth of 5.2% for the year. [What's Going Right for Brazil.]

Brazil’s Central Bank may wait till April to start raising rates, report Andre Soliani and Iuri Dantas for Bloomberg. Some traders expected the Central Bank would increase rates in March, which caused short-term contracts to fall recently. The Central Bank has been signaling for a rate increase so as to keep inflation in line.

According to the Central Bank’s survey, the median forecast of about 100 economists show that inflation could jump to 4.62% by year-end. The government’s inflation target is 4.5%.

For more information on Brazil, visit our Brazil category.

• iShares MSCI Brazil (NYSEArca: EWZ): up 112.4% year-to-date

• Market Vectors Brazil Small Cap (NYSEArca: BRF): up 18.7% in the last three months

• WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF): up 34.6% year-to-date

Max Chen contributed to this article.