Since a nation like Brazil is still an emerging economy, it is expected to do poorly because of the lack of fiscal discipline. In support of Zeledon’s view, Brazilian stocks fell to their lowest in two years after reduced demand for commodities is apparent and the speculation that investors may drop emerging markets assets.
Banco de Brasilia dropped 15% after the government authorized it to buy stakes in non-financial companies. Likewise, ALL Americana Latin Logistica SA dropped the most in three years on possible demand slowdown will hurt profits, reports Alexander Ragir and Paulo Winterstein for Bloomberg.
Right now, EWZ is 57.4% below its 200-day moving average and is down 62.9% year-to-date. This and other funds have had a hard time lately, so our strategy remains that it will be time to think about getting back in when a fund crosses above the 200-day threshhold.