mbacapitalist

Collapse of the BRIC Trade

Paul, not a total collapse, but a major speedbump on the way to prosperity. Several of the BRIC ETF's are down for various reasons. I would agree that there is a slowdown, but a total collapse in the BRIC markets is going overboard and is unsubstantiated. Take a look at the technicals for each country:
Brazil: growth hasn't slowed nearly as much as everyone has hyped. ILF which is a high quality latin american etf has still held its ground just as other brazilian companies have. PBR for example is trading in a narrow range from its recent highs in the 120s.
Russia: This oil based economy has some more upside, though a heavily energy dependent economy. Perhaps the McDonalds in Moscow (which is the most expensive in the world) will have to raise its prices.
China: Had a recent bout with high inflation, but this is a one-time spike due to the storm. Its kind of like a company taking a major charge because their shipment was wiped out as the result of a storm. China still has a lot of upside and I think if the shares dip a little more, theres a trading range (FXI).
India: Paul, I agree with you here. After coming back from a recent trip to India, this is the one country that still hasn't decoupled from the US in a decent fashion. The city of Bangalore can pretty much state it all, massive amount of construction, US merchandise everywhere, and massive hype into exporting services, particularly IT to the US clients. Its not that many of the US firms have cut back on managed services from the clients (b/c its actually a narrowly changed figure), but the weak dollar has been massively eroding the Indian firm's currency advantage. It also seems that India's banking sector needs to have some major regulatory reforms since the major banks are carrying massive amounts of debt. Just waiting in line to withdraw money was experience enough to warrant reform!
So overall, BRIC isn't dead, but at a drop-point. I think that the Indian based ETF's will have a narrow range, even tick lower but eventually rise again. The Chinese market is in its bottom, or the beginning stages of a bottom. The olympics will not boost China completely. Remember, the last country to host the olympics spent a ton and pretty much got saddled with a ton of debt for years to come. Russia has some room to grow as they slowly modernize. MBT is a great play in this market. Brazil - has decoupled from the US, so the biggest reason why the ETF's related to Brazil or actually any of the ETF's mentioned have been performing poorly is b/c of market conditions.