Despite a strong rebound since the March lows, Brazil country-specific exchange traded funds haven’t resonated with investors.

The iShares MSCI Brazil ETF (NYSEArca: EWZ), the largest Brazil-related ETF, was among the best performing non-leveraged ETFs of Tuesday, rising 5.8%. EWZ has also increased by 36.6% since its March lows.

However, EWZ also saw about $870 million in net outflows since March 23, according to ETFdb data.

Foreign investors continue to withdraw money out of Brazil’s stock and bond markets en masse as hard-right president Jair Bolsonaro fuels uncertainty. Foreign investors have pulled $11.8 billion from Brazilian stock markets over the four months ended May and $18.7 billion from its bond market from February through April, the Financial Times reports.

The record outflows “reflect investors’ fears regarding the evolution of the pandemic but, most importantly, the fear of Bolsonaro as an agent of economic, political, institutional and health crises himself,” Monica de Bolle, a senior fellow at the Peterson Institute for International Economics in Washington, told the FT.

Foreign investors have been skeptical of Bolsonaro’s promises of fiscal discipline as reflected by the steady outflow of money from the Brazilian stock market last year. However, since March, foreign money has flooded out of Brazilian assets, according to the Institute of International Finance.

On the other hand, other emerging markets have seen sentiment improve. While the emerging markets suffered $83 billion in outflows in March, they enjoyed nearly $23 billion in inflows over April and May.

Fueling the uncertainty in Brazil, Bolsonaro has been a key contributor to the perceived political crisis, but he continues to brush off the seriousness of coronavirus pandemic even as Brazil suffers more than 500,000 infections and an estimated 30,000 deaths.

The escalating health problem has caused Paulo Guedes, the economy minister, to shelve his reformist agenda, discouraging investors. Brazil previously attracted investors for its promises of fiscal reform.

“The macro is ugly, there’s no growth and no carry, the fiscal situation is getting worse and on top of that is Covid-19 and messy politics,” Paul Greer, emerging market fixed income portfolio manager at Fidelity International in London, told the Financial Times.

“Investors always felt that Bolsonaro was happy to outsource decision making, with Guedes in the economy ministry and Moro at the justice ministry,” Greer added. “But now it looks as though he is trying to take hold of executive power, which is something the market really doesn’t want.”

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