Brazil ETFs rebounded Friday after the previous session’s steep selling as bargain hunters look to an oversold market.

On Friday, the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) rose 4.0%, VanEck Vectors Brazil Small-Cap ETF (NYSEArca: BRF) gained 4.2% and iShares MSCI Brazil Small-Cap ETF (NYSEArca: EWZS) increased 4.8%. Over the past three months, EWZ declined 28.3%, BRF decreased 25.8% and EWZS retreated 27.6%. Technical traders may have also noticed that three funds were also trading in oversold territory as indicated by the Relative Strength Index, with EWZ down as much as 8% Thursday, its worst daily fall since May 2017, according to FactSet data.

The weakness in Brazilian equities was attributed to a number of factors, including growing concern over the recent labor strikes, which were largely attributed to the rising unrest among truckers, along with uneven economic growth and potential political risk ahead during the presidential election in October, MarketWatch reports.

Furthermore, traders may have also dumped riskier emerging market assets in light of the recent shift to safe-haven assets like Treasuries and the dip in U.S. equities on Thursday. The shift also pushed the Brazilian real currency towards its lowest level since early 2016 when former president Dilma Rousseff was ousted, inflation was in the double-digits, interest rates were double today’s levels and the current account deficit was 2% of GDP.

A Hopeful Outlook for Brazil

J.P. Morgan Chase & Co is maintaining its outlook on Brazil, despite acknowledging that it would have likely downgraded the market a month or so ago, Bloomberg reports.

β€œIt is a relative call and not one in which we are seeing that the country is poised for great things,” JPMorgan strategists led by Emy Shayo said in a note, adding that Brazil is structurally better than in the past.

JPMorgan strategists argued that valuations look relatively cheap but risks remain, pointing to potential hurdles like a slowdown in earnings growth on a lower GDP forecast and the election season.

For more information on the Brazilian markets, visit our Brazil category.

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