Brazil’s economy is greatly diversified, as it has opportunities to expand its booming agricultural sector into new fields. It also has many untapped natural resources. Furthermore, new oil discoveries will push Brazil up into the top echelon of oil producers within the next decade. Brazil’s national oil company, Petrobras, expects to be producing 100,000 barrels of oil per day from one of its oil fields by 2010, and hopes to produce a million per day within 10 years. Similarly, Petrobras believes that anywhere between five and eight billion barrels of oil exist off the Brazilian coast.
As the slowdown of the global economy was originally thought to affect Brazil, this country has been surprisingly resilient and has showed no signs of a hangover from the economic problems the US and Europe face. Don Hanna of Citibank may put it best when it comes to the Brazilian economy, “What makes Brazil more resilient is that the rest of the world matters less.”
A few ETFs that could capitalize on the stability of the Brazilian economy include:
- iShares MSCI Brazil Index (EWZ), up 1.4% year-to-date
- Claymore/BNY BRIC (EEB), down 14.8% year-to-date
- SPDR S&P BRIC 40 (BIK), down 13.4% year-to-date
- iShares S&P Latin America 40 Index (ILF), up 2.3% year-to-date
As investors consider actions involving these ETFs, it is important to watch each 200-DMA before deciding whether they are in or out. While Brazil might have potential, it’s best to wait until it demonstrates a firm trend upward.