Related: How Central Banks Affect LatAm ETFs
“Nonetheless, positive trends taking hold in the industrial sector support our view that investment is recovering. While industrial production (IP) is still falling on a YoY basis, the fact that IP recorded 5 straight months of month-on-month growth through July supports this expectation,” according to the Moody’s note posted by Barron’s.
After several years of dismal performances, Latin America exchange traded funds are roaring back in 2016 and have actually been leaders of the emerging markets resurgence. Rebounding commodities prices and the weaker dollar are key reasons why Latin America ETFs are rebounding. Brazil hosted the Summer Olympics earlier this year, which could be a catalyst though the jury is still out on that.
After the Summer Olympics, though, the index of the host country typically outperforms the global benchmark over the next one-year period. Based on recent historical data of the past eight Summer Olympics, the average percentage change of the local index one year after the closing ceremony was 23.8%, compared to the 10.7% change of the MSCI World Index, according to FactSet.
For more information on the Brazilian markets, visit our Brazil category.