Global money managers continue to find Brazil-based equities an attractive bet, drawn in by low prices after years of underperformance. Data compiled by Bloomberg show that Brazilian equities received $224.7 million in the week that ended March 18, leading other emerging market nations.
Deltec Asset Management portfolio manager Greg Lesko told Bloomberg that Brazilian stocks “are still relatively cheap after two years of poor performance and we expect commodity prices to remain elevated,” before adding: “Selectively we’re still positive” on Brazil.
Brazil-based stocks are also reaping the benefits from rising commodity prices and Russia being excluded from emerging market indexes. Overseas investors are also optimistic that whoever wins the presidential election in October won’t disrupt Brazil’s economic policy.
“A lot of the bad news feels like it was priced into Brazil markets,” Defiance ETFs chief investment officer Sylvia Jablonski told the media outlet. “Now you have the consumer confidence index stabilizing, growth in retail sales, you have a positive outlook on energy, increased commodities demand and this is playing out in Brazil.”
As of December 31, Brazil made up 4.58% of the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ) and 13.3% of the Next Frontier Internet & Ecommerce ETF (FMQQ).
EMQQ tracks an index of leading internet and e-commerce companies serving emerging markets. It seeks to offer investors exposure to the growth of online consumption in the developing world. EMQQ holdings operate in diverse markets such as India, China, Brazil, Turkey, Nigeria, and Indonesia, to name a few. To be included, the companies must derive their profits from e-commerce or internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming, or online travel.
FMQQ provides investors targeted exposure to the non-Chinese companies in EMQQ. It seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Next Frontier Internet and eCommerce Index (FMQQetf.com). All securities must have more than $300 million in market cap and have more than 50% of their revenues come from internet and/or e-commerce businesses in emerging and frontier markets (excluding China). The fund rebalances semi-annually.
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