Seeking Alpha

Time to panic over Brazil?

  • “Brazil’s capital markets appear to be suffering from a sudden flight of capital," says Michael Shaoul, warning of a danger of "abrupt collapse in investor confidence ... Brazil should be watched closely in the days ahead."
  • The Bovespa slid another 1.75% today, but more alarmingly, the country's 10-year yield spread (vs. the U.S.) shot to its highest level since the summer of 2009.
  • This morning, Q3 GDP was reported to have contracted by 0.5%, worse than expectations. From Capital Economics: "Brazil is not particularly attractive to foreign firms ... Woefully low domestic savings mean that Brazil relies on attracting foreign capital in order to fund investment projects. But with the current account already in a significant deficit, there is little scope for running up an even larger external deficit to fund investment."
  • Off 1.3% today, the iShares MSCI Brazil Index ETF (EWZ) is down 20% YTD.
  • ETFs: EWZ, BRF, BZF, BRXX, EWZS, BRAQ, BRAZ, BZQ, BRAF, UBR, BRZU, FBZ, BRZS, DBBR
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Comments (2)
  • afelipelli
    , contributor
    Comments (69) | Send Message
     
    Brazil is a tricky place to invest in nowadays. But these times often generate opportunities with 5-star stocks: http://bit.ly/1beIDAU
    3 Dec 2013, 08:51 PM Reply Like
  • theo_rhetoric
    , contributor
    Comments (201) | Send Message
     
    No doubt there is negative momentum and the trailing PE ratio is still high at 18 but you have to be early on these opportunities because the reversion is quick.
    11 Dec 2013, 11:23 AM Reply Like
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