Criticism of Rousseff’s handling of Brazil’s once powerful, high-flying economy is also rampant.
“Weakening foreign demand and a severe, double-digit contraction of business fixed investment may have plunged the Brazilian economy into a technical recession,” said S&P Capital IQ in a recent research note. The inflation dimension of Brazil’s economic troubles remains particularly thorny since the 375 basis points of interest rate increases, culminating in an eleven percent Selic rate, by the central bank has accomplished little in the way of stabilizing price pressures at the household level. The speedup in annual consumer price rises to 6.8 percent last month testifies disappointingly to Rousseff’s management of the economy during her first term in office.”
The research firm has an underweight rating on Brazilian equities. Monday’s action reiterates the vulnerability of Brazilian stocks to favorable polling news for Rousseff. To this point in the U.S. session, the Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF) and EWZ are the two worst-performing equity-based ETFs.
Since the start of this month, investors have pulled $110.7 million from EWZ. BRF has been steady with no new inflows or outflows.
iShares MSCI Brazil Capped ETF