Brazil’s central bank has not hiked interest rates since last year. 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

Brazil’s economy is expected to grow less than 1% this year, but that is better than the contraction experienced last year.

“Our year-end 2016 target for the Ibovespa is BRL57,000 (base case)-63,000(bull case), but as discussed earlier in this report we encourage investors to focus on medium-term earnings power and focus on P/BV metrics,” according to the JPMorgan note posted by Barron’s.

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

iShares MSCI Brazil Capped ETF