The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), the largest Brazil exchange traded fund trading in the U.S., rallied late last year amid President Jair Bolsonaro’s ascent to that country’s top leadership. Importantly, Brazilian stocks are following through on that post-election day strength.
To start 2019, EWZ is up 12.65%, making it one of the best-performing emerging markets single-country ETFs to start the new year.
Bolsonaro has promised wide-ranging reforms aimed at stomping out corruption in Latin America’s largest economy. His ability to make good on the promised reforms is seen as pivotal to the fortunes of Brazilian assets in 2019. Brazil’s economy is expected to post GDP growth of just over 2% this year and 2.7% in 2020.
“Brazilian markets are off to a strong start in 2019. And while worries about much needed structural reforms remain, a market-friendly government and supportive fundamental backdrop could make this year a doozy, according to bullish analysts,” reports MarketWatch.
Plenty Of Optimism for Brazil
Markets observers were optimistic that Bolsonaro’s economic cabinet, led by former investment banker Guedes, will push through reforms needed to cut down the country’s 180 billion reais, or $47.31 billion, deficit and restore confidence and growth to the ailing economy.
“Just last year, Brazil’s contentious presidential election and worries about much needed structural reforms to shore up the country’s fiscal health curbed investor enthusiasm,” according to MarketWatch. “Economists say the reforms are still needed, but sentiment seems increasingly supportive even before outspoken newly elected President Jair Bolsonaro takes the stage at the World Economic Forum in Davos, Switzerland, next week.”