Rising Unemployment Dings Resilient Brazil ETFs

Includes: BRF, BRXX, BZF, EWZ
by: Tom Lydon

Yikes. Unemployment in the growing nation of Brazil rose 7.6% last month. The numbers, which are down from 9% one year earlier, may not do much to calm concerns that the Latin American country’s economy and ETFs are overheating.

The increase may, in fact, be seasonal and demand for workers for the rest of the year is expected to increase. That’s the good news. It also puts Brazil’s government in a tricky position of dealing with joblessness while ensuring that the economy continues to move while staving off inflation.

Brazil has an established history of coping well with the ups and downs of the economic cycle; perhaps the country can once again demonstrate that, because there’s little that investors don’t like about it:

  • Brazil has one of the most friendly investment climates for outside investors. Overseas investors, both individuals and legal entities, can invest in most of the financial and capital market instruments available to resident investors with little restriction.
  • Brazil is the 10th-largest economy in the world, and over the past four years it has grown 4-5%.
  • Brazil is one of the few countries in the world that are self-sufficient in oil, which plays a very crucial role in global economy, and the country is a leader in alternative energy sources. It is these natural resources that will take Brazil to the top of many investor’s lists.

If Brazil can regain its momentum, keep inflation in check and an overheating situation at bay, we may see the number of ETFs based on Brazilian stocks increase by leaps and bounds in the coming years, reports Manoj Singh for Investopedia.

EGS INDXX Brazil Infrastructure (NYSEArca: BRXX)

iShares MSCI Brazil (NYSEArca: EWZ)

Market Vectors Brazil Small Cap (NYSEArca: BRF)

Wisdom Tree Dreyfus Brazilian Real Fund (NYSEArca: BZF)