Brazil’s economy and exchange traded fund (ETF) are heading south like just about everyone else as investors take their money out of emerging markets.
It was once believed that these economies were decoupled from the West, but lately, it doesn’t seem to be the case, says Reuters. They appear to be just as impacted by the financial turmoil around the globe as anyone, and both their stock markets and currencies seem to be deeply hit.
Globally, most emerging markets have lost about 60% since May, hitting their lowest point in four years. Many of them lost 38% in October alone. Brazil has fallen 47%.
While the allure of iShares MSCI Brazil (EWZ) as a commodities play can be seen by some, the nature of Latin American economies is one warning sign that it may be better to stay away for the time being, reports Max Zeledon for Seeking Alpha.
That’s primarily because, in a nutshell, Latin America and Brazil are too dependent on commodity exports and this is the sole reason for their volatility, especially right now.