Downtrodden BRIC ETFs need the world’s second-largest emerging economy, Brazil, to get back on track for any chance to salvage a miserable 2013.
The iShares MSCI Brazil Index Fund (EWZ) has tumbled 17% the past three months. [Brazil ETFs – Is it Time to Get in?]
Brazil is the second-largest country allocation in Guggenheim BRIC ETF (EEM) after China. Russia and India round out the BRIC fund. [An ETF for an India Rebound]
India and Brazil are the worst-performing BRIC countries the last three months. [Are India ETFs Becoming The New Brazil ETFs?]
In Brazil, the economic outlook doesn’t inspire confidence. The country’s manufacturing activity declined in July for the first time since September “as slowing orders and rising costs cut short a recovery for struggling industries,” Reuters reported.
Also, economists covering Brazil lowered their growth forecasts for 2013 and 2014 as the government struggles to restart the economy, Bloomberg reported this week.
Brazil will also continue to wrestle with inflation, the central bank economic department director says, according to a Dow Jones Newswires report.
However, on the technical side, there are some faint signs of home for EWZ, the Brazil ETF. The fund has carved out a bullish inverse head-and-shoulders pattern as it tests the 50-day moving average, notes Kimble Charting Solutions.
iShares MSCI Brazil Index Fund
Chart source: Kimble Charting Solutions.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.