With the FIFA World Cup 2014 in Brazil just one week away,
organizers are scrambling to put the last-minute touches on many
still unfinished, structures that will support this global
An estimated one billion people around the world are expected
to watch the opening match, which makes this a key showcase for
the Brazilian people and economy.
And while uncertainty surrounds the preparation of these new
sport stadiums, the Brazilian stock market has also been on shaky
The iShares MSCI Brazil Capped ETF (NYSE:
) tracks 75 of the largest stocks in this Latin American country.
Currently, EWZ has over $4.2 billion invested in a
diversified basket of Brazilian equities and has been on the
decline since hitting a year-to-date high in May.
EWZ has slipped over seven percent in just a few short weeks,
and is clinging to a modest 2.75 percent gain so far this year.
Brazil represents just over 10 percent of the broader iShares
MSCI Emerging Market Equity ETF (NYSE:
), which has also managed to gain two percent gain in 2014.
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Emerging market stocks, and Brazil in particular, have been on
the decline in recent years as investors have chased performance
of domestic equities here in the United States. However, EWZ had
been making a strong comeback since finding a bottom in February
that has many investors considering repositioning their
portfolios back into Latin America and emerging market
The Market Vectors Brazil Small Cap ETF (NYSE:
) is also at a critical crossroads of technical support that
needs to hold. if the rally in Brazilian equities is going to
extend higher. This ETF has $160 million invested in 75 Brazilian
small cap stocks and may be considered a complimentary position
to a large-cap holding such as EWZ.
While the recent dip in EWZ and BRF may be the result of a
short-term pull back,
a strong showing of economic prosperity
during the World Cup tournament may be just what this country
needs to reinforce their stock market.
A reflation of emerging market countries such as Brazil would
be seen as a positive sign for global growth that has never been
easier to tap using low-cost exchange-traded funds.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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