Traders have been selling off Brazilian assets over the past year as Rousseff failed to stimulate the economy prevent credit downgrades. Now some investors are reevaluating Brazilian stocks, something that has benchmark indexes there trading at the highest multiples in a decade.
EWZ’s volatility “has been among the most erratic funds this year, according to historical volatility on the 400 biggest exchange-traded funds trading in the U.S.,” according to Bloomberg.
Although energy and materials stocks have gotten most of the attention as being the drains on the Brazilian equity market, weakness in bank stocks cannot be overlooked. Vulnerable bank stocks are particularly problematic for EWZ because financial services are the ETF’s largest sector allocation, representing a third of the ETF’s overall weight.
iShares MSCI Brazil Capped ETF
Story idea? Tip? Contact Editor-In-Chief Brenton Garen at [email protected].