Brazilian equities and country-specific exchange traded funds are rebounding as some investors jump on cheap valuations that are disconnected with fundamentals and are more a result of political scandals.

The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) gained 7.0% over the past week but is still down 31.0% year-to-date. EWZ is now trading back above its short-term, 50-day simple moving average.

Meanwhile, the ProShares Ultra MSCI Brazil (NYSEArca: UBR), which reflects two times or 200% the daily performance of the MSCI Brazil 25/50 Index, jumped 12.3% over the past week while the Direxion Daily Brazil Bull 3x Shares (NYSEArca; BRZU), which tracks three times or 300% the daily performance of the MSCI Brazil 25/50 Index, surged 20.8%.

Luiz Fernando Figueiredo, founder of Maua Sekular Investimentos and former director at the central bank, points out that unlike the previous 2002 financial crisis that pushed the Brazilian government to the edge of default, Brazil has plenty of money now to honor debts and argues that Brazilian assets now look cheap, Bloomberg reports.

In 2002, “that was a time of stress,” Figueiredo told Bloomberg. “Today, we have zero stress, just in prices.”

Brazilian assets have been under pressure as a corruption scandal at state-run oil giant Petroleo Brasileiro impeded government efforts to curb a rising budget deficit and slow inflation. EWZ includes a 10.8% tilt toward the energy sector, including 3.8% in Petroleo Brasileiro and 3.4% in Petrobras.

The troubles also dragged on the Brazilian real currency, the world’s worst-performing major currency this year after touching a record low of 4.25 per dollar back in September. The real has since strengthened to 3.8 per dollar.

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