With the World Cup over, investors will be focusing on Brazilian politics. The country holds national elections in October and EWZ has already shown a positive correlation to negative poll numbers for incumbent President Dilma Rousseff.
Some analysts have gone so far as to say Brazi’s embarrassing defeat in the World Cup could have consequences for Rousseff and that may be the reason EWZ has performed well in the wake of two consecutive defeats for Brazil to end the World Cup.
Market observers believe Brazil’s central bank will begin lowering interest rates if Rousseff loses her reelection bid. Credit Suisse’s CSHG Verde FIC FIM, the biggest Brazilian hedge fund, believes rate cuts there could take place in the near-term, Reuters reported.
Brazil’s central bank boosted rates nine times from the second quarter of 2013 to April 2014. The WisdomTree Brazilian Real Strategy Fund (NYSEArca: BZF) is up 13.6% this year.
iShares MSCI Brazil Capped ETF
