“Most emerging markets are primarily export-based economies, meaning that increasing trade barriers directly impact their ability to grow economically. Brazil, for example, was the 24th-largest exporter in the world back in 2016. That year, Latin America’s biggest economy exported $191 billion in goods,” according to CNBC.
EWZ still has some work to do to potentially lure more bullish investors. The ETF is still sporting a year-to-date loss north of 10%, even with July’s surge, and the fund resides more than 10% below its 200-day moving average. EWZ also languishes more than 24% below its 52-week high.
Despite the difficulty in predicting the next president, there are still constructive drivers that should benefit stocks over the next few months. For instance, J.P. Morgan expects Brazil to post the best corporate earnings growth in 2018 among Latin American peers. Additionally, a number of its industries are linked to commodities, which benefit from a weaker real currency.
For more information on the Brazilian markets, visit our Brazil category.