Falling Investment Cripples Brazil ETFs, Economy | ETF Trends

Brazil exchange traded funds have been stuck in a rut as the Brazilian economy, one pillar of the BRIC emerging markets, stumbled over the third quarter, despite the heavy helping hand from the government.

The iShares MSCI Brazil Index Fund (NYSEArca: EWZ) lost 1.6% over the past three months and is down 7.7% year-to-date.

Brazil’s economy only expanded 0.6% in the third quarter, which was below Bloomberg’s 1.2% median estimate of surveyed economists, after the country’s stimulus measures failed to support investments for the fifth straight period, reports David Biller for Bloomberg.

“Today’s report was awful,” Neil Shearing, chief emerging markets economist for Capital Economics Ltd., said in the article. “The really disappointing thing about today’s data is that despite all the policy stimulus over the past year, it’s clear the economy is still struggling to get going.”

The benchmark Bovespa stock index declined as much as 1.7% during trading.

President Dilma Rousseff has cut rates to record lows, diminished taxes and increased spending to help bolster the economy.

“This is very welcome, though unfortunately what brought Brazil to this state of affairs of weaker investment is something that built up over years,” Andre Loes, chief Latin America economist at HSBC Bank Brasil SA, said in the article. “It’s going to take time for these measures to show results.”