Brazilian stocks have rallied this year and banks in Latin America’s largest economy appear inexpensive, those institutions are faced with declining consumer credit quality. Additionally, some Brazilian states have recently delayed payment to public workers, potentially crimping the ability of those workers to repay loans taken from Brazilian banks.

Related: How Central Banks Affect LatAm ETFs

“We continue to favour ‘liquidity’ markets with Overweights in India, Indonesia, Korea, Russia, Turkey, Hungary and Peru and, by region, in Asia. Our main Underweights are Brazil, Mexico and South Africa,” according to part of a UBS note posted by Barron’s.

Brazil ETFs, including the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), are among this year’s best-performing single-country emerging markets ETFs. However, with the U.S. dollar looking poised to rebound, Brazilian stocks could be vulnerable to some near-term upside. Additionally, data out of Latin America’s largest economy is far from encouraging, which could prompt investors to take profits in Brazilian equities and the corresponding ETFs.

For more news on the Emerging Markets ETFs, visit our Emerging Market category.

iShares MSCI Emerging Markets ETF