The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) plunged 41.5% last year, making it one of the worst-performing single-country emerging markets exchange traded funds. As a result, finding investors that are bullish on Brazilian equities is becoming an increasingly difficult task.

Multiple factors are dragging on the Brazilian economy. Unemployment rose to 7.9% in September from 4.7% in October last year. Inflation has jumped over 10% for the first time since 2002. The budget deficit has widened to 9.5% of GDP. Additionally, lower commodity prices, diminishing consumer credit boom and a corruption scandal at state-run oil giant Petroleo Brasileiro have all weighed on the economy. [Corruption Probe Plagues Brazil ETF]

The situation surrounding a potential impeachment of Brazilian President Dilma Rousseff has been a problem as well as investors try to sort out if regime change is really coming to Latin America’s largest economy.

“The Ibovespa posted its fifth straight year of losses when measured in dollars, the longest rout since at least 1992, as the outlook for Brazil’s recession worsens amid a graft probe, political turmoil, a junk credit rating and a commodity plunge. While the slide sent valuations tumbling, many analysts aren’t yet convinced it’s time to bet on a recovery in shares from Latin America’s largest economy,” reports Denyse Godoy for Bloomberg.

In September, Standard & Poor’s downgraded Brazil’s sovereign credit rating to junk status, becoming the first major ratings agency to do so. Even after the retreat, Brazilian stocks may have further to fall as the economic contract worsens.

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