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  • Must Brazil Opt Out Of BRIC? 0 comments
    Apr 9, 2013 7:52 AM

    Analysts who unanimously justify the Brazil bashing, and often enjoy partaking, normally cite a dismal economic growth of last two years as their only support case. However, the same think-tank machinery will also agree on the fact that it is quite unfair to decipher current Brazil on the same codes as used for its BRIC partners, simply because their economic structure are radically different from the largest South American Economy.

    A fact that investment in selective Brazilian Financial ETFs has still procured returns close to 9% on a 12 month basis goes a long way in saying that the policies in Brazil, which have always been around the Infrastructure Spending may clearly be failing on a short term, but on a longer term this is enabling an autonomous system of job growths in the country.

    To BRIC or not to BRIC

    Whether Brazil should be continuing in the BRIC community is something else that the top governance needs to mull over sincerely. Being in the bloc means that the Government must put an immediate stop on its Total Spending and must pass on this benefit to SMEs and other progressive business that have the potential to become future power houses on the Brazilian Capital Markets.

    The Latin economy has in past shown a clear resistance to the global down trends and the two upcoming sporting events may again stir up things in a minor way because it will get more tourism, foreign investments and international aid, but its major contribution to the investments in Brazil will be altering the overall sentiment around the capital markets and sometimes that is all what is needed to wake up an old giant.

    Foreign investors, who see an opportunity in the current downside, may consider benchmark bound Brazil financial funds that are market traded and discount for a lot of risks that one may relate with the equities. Apart from a fair index based environ and a standardised exposure to best Bank Equity from this side of Latin America, Brazil Financials ETF have in fact proved their positive deliverance even in the past twelve months during which the country's net growth was less than 1%.

    With the Soccer world Cup in 2014 and the 2016 Olympic finale, it is fair to anticipate that Real Estate along with the Tourism sector and the Latin Carnival culture will enjoy the global attention; Brazilian businesses too are bound to receive a fair amount of media and focus. Amid all the parties it is hard to believe that serious business will not take place. In this light one may rationally hope towards an improved outlook on the invest brazil financials sector because the onus of nurturing the country during this growth lies on the banking and finance institutions of the country.

    The economy is still bigger than that of Britain's and despite a drop down in retails sales for the first quarter of current, an ignorable fact is that a close to 15,000 cars are sold every day in this country which also has the largest airport network in the world and its airports are the busiest.

    The dip in the economic figure is also partially owing to a significant drop in the global demand for iron ore for which this Latin nation is the foremost supplier and the sector itself is serious contributor to the growth. Agro Products such as cane sugar, orange juice and corn are cultivated most in Brazil and it singularly accounts for more than 60% of the world orange juice productions.

    An ideology which is long on Brazil today, will find very few market vehicles that are not associated with high risk high reward category. The Brazilian bank ETFs on the other hand surely stand out in wake of their high net returns in 2012.

    Global X Brazil Financials ETF [BRAF] corresponds as per the price and yield of the Solactive Global X Brazil Braf Index after the annual expenses of 0.77%. The index which includes 25 most liquid bank stocks from the Latin nation has managed a 4+% returns in the past six months with ITAU UNIBANCO BANCO ADR being its top asset with more than one tenth of net allocation. Other top stocks in this Brazil Financial fund includes BANCO SANTANDER ADR and BANCO BRADESCO SPON ADR.

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