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I'm an ETF Technical Analyst in a small financial firm in King of Prussia, PA.
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  • Brazilian Financials ETF by Global X

    By Evan Zacharias
    with contributions from Evelyn Hu

    Today, Global X launched their Brazil Financials ETF (BRAF) which tracks the Solactive Brazil Financials Index, adding to their Brazil Family of ETF’s (Brazil Consumers - BRAQ and the Brazil Mid Cap - BRAZ), yet again bringing a hard to reach foreign sector readily available to American investors, following last week’s debut of their lithium ETF (LIT).  Currently, the three ETF’s that track the Brazilian equity market, are the iShares MSCI Brazil Index (EWZ), the Ultra MSCI Brazil (UBR), and the UltraShort MSCI Brazil (BZQ) where the latter two are leveraged.  In addition, there are two more Brazil ETF’s, the Market Vectors Brazil Small-Cap (BRF) and the Brazil Infrastructure Index (BRXX).

     

    Brazil posted a 631 million Brazilian real ($358.5 million) budget surplus in June, however this was lower than the forecasted amount of BRL 1.2 billion ($681.7 million), but it was well above their BRL 509 million deficit ($289.1 million) in May, and BRL 618 deficit in June of 2009[1].  Brazilian GDP expanded 9% in the first quarter, with revisions of upward growth of 1.5% from 1.4% in the second quarter, 2.2% from 1.7% in the third quarter, and 2.3% from 2% in the fourth quarter.[2]  On a recent trip to Brazil, the IMF Managing Director Dominique Strauss-Kahn stated, “[Brazil] has a key role to play in global economic governance. It is the largest economy in Latin America and is deeply integrated into the global trade and financial network. Brazil’s future is inextricably linked to global economic prospects.”  However, Strauss-Kahn also made note that the IMF will be monitoring Brazil’s activity to prevent the Brazilian economy from getting too hot too quick.[3] 

     

    Brazil’s chief exports include crude oil, coffee, soybeans, automotive parts and aircraft.  From a fundamental standpoint, there has been a decreasing unemployment rate, a steady growth in bank credit, and a high surge in industrial activity.  Following the Brazilian currency crisis in 1998, and the overall depressed state of South America in the late ‘90’s, Brazil has since restructured its banking system, removed the hard peg from the Brazilian Real to the U.S. dollar, and has since left their currency free floating.  According to Dealogic, Mergers and Acquisitions in Brazil amounted to $37.8 billion in the first quarter.  One issue to make note of however, is that in the coming months Brazil will hold an election which could provide volatility in the equity markets.   

     

    With the poor jobless claims reports in the U.S., the overall anxiety of a double-dip recession in the U.S. equity market, all time low interest rates and the worry of deflation, a looming GDP number on the horizon, the Brazilian markets present a viable alternative to both U.S. and European markets both for a short term or a long term investment. 

     

     

     



    Disclosure: No Positions
    Tags: BRAF, BRAQ, BRAZ, LIT, EWZ, UBR, BZQ, BRF, BRXX
    Jul 29 1:08 PM | Link | 1 Comment
  • First Lithium ETF by Global X

    Today, Global X has released the first lithium ETF (LIT) which aims to track the Solactive Global Lithium Index.  This ETF, like other Global X precious metal ETFs (SIL, COPX) does not track the spot price of the underlying commodity, since, in this case, there is none, unlike other precious metal ETF’s (PALL, GLD, PPLT).   Since it is impossible or difficult to invest in specific areas of the market like lithium or platinum (PLTM), it is only natural that an index would be created to monitor the performance of the companies in the industry.  The underlying index is therefore the lithium industry, 51% of the index are lithium and mining companies, the other 49% are lithium-ion batteries firms.  More importantly, the index provides slight global exposure, with the majority of the companies being U.S based but also Chile(ECH), Japan(EWJ, ITF), Canada(EWC), France(EWQ), Australia(EWA), and China (FCHI, FXI, YAO). 

    The crux of the matter is that lithium has the potential to be a lucrative investment.  In the growing need to have cars that don’t produce carbon emissions like in the case of the hybrid, or just a car that runs off electricity, there will be more of a demand for batteries, thus generating more profits for the lithium companies.  Lithium has several additional uses beyond being the functioning component of a lithium battery.  Lithium, since it has the highest specific heat of any solid element, is used in several different applications involving high heat, such as nuclear applications or high-temperature lubricants[1].

    Global X has also recently issued BRAZ, BRAQ, SIL, and COPX, all of which have been successful in attracting both assets and volume, as well as presenting the opportunity to invest in a market that is more difficult to reach.

     



    Disclosure: No Positions
    Tags: SIL, COPX, PALL, GLD, PPLT, PLTM, ECH, EWJ, ITF, EWC, EWQ, EWA, FCHI, FXI, YAO, BRAZ, BRAQ
    Jul 23 9:51 AM | Link | Comment!
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