The Hottest Market in the World (ETF EWZ; PBR, RIO, ITU, BBD, ABV, TSP, GGB, CIG)

Eddy Elfenbein submits: A few months ago, I wrote about the hottest stock market in the world. It’s in Brazil, and things haven’t slowed down. The Brazil iShares (EWZ) are up about 500% in the last three years.

Brazil seems to be in the sweet spot of the global economy. Speaking of sweet spot, the price of sugar has doubled in the past year which helps Brazil, the world’s largest sugar producer. The reason for the rally is that more sugar is being converted to ethanol to cope with record gasoline prices.

There was some fear that the Brazilian economy might be slowing down. In response, the Brazilian Fed just cut interest rates by 0.75% to 17.25%, which helped spur the stock market.

There’s a presidential election coming up and "Lula" looked like he was on his way out, but he’s recovered in the polls. The financial situation has improved dramatically in Brazil. The government recently said that it has enough cash-on-hand to go four months without a debt offering. I would have thought someone was joking if I had heard that five years ago.

Some major Brazilian stocks include:

• Petroleo Brasileiro (PBR)
• Companhia Vale do Rio Doce (RIO)
• Banco Itau Holding Financeira (ITU)
• Banco Bradesco (BBD)
• Companhia de Bebidas Das Americas (ABV)
• Telecomunicacoes de Sao Paulo (TSP)
• Gerdau (GGB)
• Companhia Energetica de Minas Gerais (CIG)

EWZ 3-yr chart:

Related:

International Momentum in Brazil

Brazilian Market Soars

Eyes on the Brazilian ETF