Brazil ETFs Roar Back as Government Incompetence Ends

  • Brazilian equities and ETFs among worst performers in 2015, but emerging market has roared back
  • Brazilian rally went into high gear after former President Luiz Inacio Lula da Silva was detained
  • Traders had been selling off Brazilian assets over the past year as Rousseff failed to stimulate the economy 

Brazilian equities and country-specific exchange traded funds have been among the worst performers last year, but the emerging market has roared back.

The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) has surged 45.3% since its January 21 low. EWZ is now trading back above its long-term, 200-day simple moving average.

Vale and Petrobras shares have led Brazilian markets higher on a rebound in raw materials prices, Reuters reported.

Vale, the world’s largest iron ore miner, strengthened to four month highs as iron ore prices jumped. Traders are betting that Chinese steel mill demand could rise ahead of an international horticultural exposition later this year.

The rebounding crude oil prices also bolstered state-controlled oil company Petroleo Brasileiro.

EWZ includes a 2.3% tilt toward Vale SA and 3.3% in Petrobras. The energy sector makes up 9.9% of the ETF’s portfolio and materials is 9.3% of underlying holdings.