Shares of the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) are up 1.4% Tuesday and are flirting with their highest levels since November 2013 after a new poll showed support for President Dilma Rousseff continues to erode.
“According to a survey by local polling firm MDA, 37.0 percent of those surveyed said they intend to vote for Rousseff, compared to 43.7 percent in February,” Reuters reported.
With Brazilian elections five months away, Rousseff is seen as vulnerable due to her constituents’ concerns about the sturdiness of Latin America’s largest economy. A scandal involving state-controlled oil giant Petrobras (NYSE: PBR), EWZ’s largest holding, has not helped matters.
Since Rousseff took office on Jan. 1, 2011, shares of Brazil’s state-controlled oil giant Petrobras (NYSE: PBR) have plunged more than 60%, but as Rousseff’s popularity has slid, shares of Petrobras have surged more than 23% in the past three months. [Petrobras Pushes Brazil ETFs Lower]
Minority parties in Brazil’s congress are seeking to open an investigation related to a 2006 acquisition of a U.S. refinery by Petrobras, though some analysts believe the investigation could be a positive for the stock because it could reduce government interference in the company, according to the Wall Street Journal.
Although the approval rating for Rousseff’s government fell to 32.9% this month from 36.4% in April, one issue for investors to watch is if any of her challengers can actually beat her. While Rousseff’s current support levels are far from impressive, challengers Aécio Neves and Eduardo Campos only showed support levels of 21.6% and 11.8% in the MDA poll, Reuters reported.
EWZ is higher by nearly 20% over the past 90 days, but only recently have investors been warming to the largest single-country ETF tracking a Latin American economy.
Since April 15, EWZ has pulled in $317.5 million in new assets after losing $158.4 million in assets in the first quarter. Still, the recent inflows to EWZ are not even half the amount pulled from the ETF in the March 3 through April 15 period. [Brazil ETF Finally Sees Inflows]
iShares MSCI Brazil Capped ETF
