An easing global recession, increased demand for commodities and higher domestic demand – it’s all come to benefit Brazil‘s economy and exchange traded fund (ETF).
Some good things happening over there:
- Brazil’s Bovespa index recently reached an 11-month high after ending July with its best monthly gain since 1995, write Alexander Ragir and Emily Schmall for Bloomberg. Bovespa’s valuations are up 23.25 times reported earnings, more than the average 17.91 price-to-earnings ratio of emerging market stocks tracked by the MSCI Emerging Market Index.
- Earnings that exceeded estimates and small contraction for the U.S. economy prompted investors to speculate on a global recovery. Commodities, which make up two-thirds of Brazil’s exports, climbed to a six-week high.
- The Brazilian banking sector is gaining on a growing consumer market.
- Brazil’s June industrial production rose 0.2% from May, which is also its sixth straight month of gains, reports John Kolodziejski for The Wall Street Journal.
- Consumption in autos, which pushed output up 12% in the first half of the year, construction, and domestic appliances, services and retail sectors were areas that contributed to the industrial recovery.
- Capital goods output increased 2.1% from May, mining output gained 5.3%, basic metal processing was up 2.0% and petrochemicals rose 2.9%.
- Exports increased from $9.78 billion in January to $14.14 billion in July. The mining sector, especially iron ore, was the largest contributor to the trade balance.
- The Brazilian real is also on a hot streak. It’s the world’s best-performing currency against the dollar this year, and Merrill Lynch says it may climb another 7% in the next month, reports Fabio Alves for Bloomberg.
- iShares MSCI Brazil Index (EWZ): up 73.9% year-to-date
- WisdomTree Dreyfus Brazilian Real (BZF): up 24.2% year-to-date
Max Chen 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.