Economic re-opening plays need not be relegated to the United States. Brazil is rebounding amid a global vaccine deployment, leading the Direxion Daily MSCI Brazil Bull 2X ETF (BRZU) up 18% for the year.
Per a Reuters article, Brazil’s GDP grew by 1.2% during the first quarter “as rebounding services and investments took Latin America’s largest economy back to its size at the end of 2019, before the pandemic hit.”
“It was the third consecutive quarter of growth,” the article noted further. The rebound has slightly dissipated, but strong fundamentals could continue to prompt analysts to revise their predictions upward through the second half of 2021.
“This makes the outlook for the coming quarters very positive,” said Jason Vieira, chief economist at Infinity Asset Management in Sao Paulo, who also said the data represents “a really good set of numbers, especially fixed business investment.”
Traders looking for a leveraged play on Brazil can add BRZU in their toolbox. BRZU seeks daily investment results equal to 200% of the daily performance of the MSCI Brazil 25/50 Index, which is designed to measure the performance of the large- and mid-capitalization segments of the Brazilian equity market, covering approximately 85% of the free float-adjusted market capitalization of Brazilian issuers.
“Strong Year” for Brazil’s Economy
Economy Minister Paulo Guedes was effusive in his praise for Brazil’s economy for the rest of 2021. Guedes noted that growth this year will likely be “very strong,” while economists at Citi and Goldman Sachs upped their 2021 GDP forecasts to 5.1% and 5.5%, respectively.
“We expect the economy to recover visibly in coming quarters in tandem with further progress on the Covid vaccination front, gradual reopening of the economy, renewed fiscal stimulus, (and) recovering consumer and business confidence,” Alberto Ramos at Goldman Sachs said in the Reuters article.
Traders looking to avoid single-country concentration risk can opt for a broader Latin America play in the the Direxion Daily Latin America Bull 2X ETF (LBJ). The fund is up 14% for the year.
LBJ seeks daily investment results equal to 300% of the daily performance of the S&P Latin America 40 Index. The index itself is a float-adjusted market capitalization weighted equity index of issuers drawn from five major Latin American markets: Brazil, Chile, Columbia, Mexico, and Perú.
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