The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), the largest exchange traded fund tracking stocks in Latin America’s largest economy, had an eventful week last week. EWZ’s turbulence was punctuated with a heavy volume gain of almost 7% Friday after the ETF plunged more than 16% on Thursday.
As ETF Trends reported last Friday, money managers from Morgan Stanley to BNP Paribas SA argue that the short-term volatility is not changing their long-term bullish view on Brazil. Morgan Stanley said it remains “constructive” on Brazil due to improvements in the emerging country’s external accounts and the central bank’s ability to minimize volatile moves. BNP Paribas Investment Partners said the “political noise” would not alter its view on Brazil, even if there is an orderly transfer of power in the government.
For now at least, Brazil’s credit ratings appear firm.
“Fitch Ratings has affirmed Brazil’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ‘BB’. The Rating Outlook is Negative. The issue ratings on Brazil’s senior unsecured Foreign and Local Currency bonds are also affirmed at ‘BB’. The Country Ceiling is affirmed at ‘BB+’ and the Short-Term Foreign Currency and Local Currency IDRs at ‘B’,” said Fitch in a note out Friday.