Friday, March 14, 2014

Investing in Brazil

  • Brazil is rich in a wide variety of natural resources and in a unique position to thrive as a supplier of raw materials to the emerging world
  • Brazil is hosting soccer's World Cup in 2014 and the Olympics in 2016 -- two events that require a functional infrastructure. 
  • Brazil’s clean energy revolution has been a largely overlooked accomplishment.
  • Outgoing president Luiz Inácio Lula da Silva has an 80% approval rating at the end of his second term

*click on the symbol to view the fund's chart & profile on Yahoo Finance (opens a new window)

Exchange Traded Funds (ETFs)
Symbol (*)Name
Fund Family

Investment Objective
Ave Daily Volume
EWZiShares MSCI Brazil IndexiSharesBrazil15,533,200
BRFMarket Vectors Brazil Small-Cap ETFVan EckBrazil Small-Cap305,342
BZQUltraShort MSCI BrazilProSharesBrazil, 2x short162,567
ILFiShares S&P Latin America 40 IndexiShares5 Latin American countries (Brazil, Mexico, Chile, Peru)2,141,630
EEBClaymore/BNY Mellon BRIC ETFClaymore SecuritiesBrazil, Russia, India and China217,705
BKFiShares MSCI BRIC IndexiSharesBrazil, Russia, India and China135,134
BRXXBrazil InfrastructureEmerging Global SharesBrazil Infrastructure26,209
BRAZBrazil Mid CapGlobal XBrazil Mid Cap31,510
BRAQBrazil ConsumerGlobal XBrazil Consumer20,934
BRAFBrazil FinancialsGlobal XBrazil Financials12,219
UBRUltra MSCI Brazil FundProShares2x MSCI Brazil Index12,723
BZQUltraShort MSCI BrazilProShares2x short MSCI Brazil Index156,637
BZFBrazilian RealWisdomTreeBrazilian Real (currency)107,266

Brazilian companies listed on US exchanges
Company
Symbol (*)
Sector / Industry

Market Cap

(mln $)
Ave Daily Volume
ValeVALESteel & Iron148.91B26,526,500
Itaú UnibancoITUBBanking97.03B16,025,400
Petroleo BrasileiroPBREnergy87.31B14,010,900
Banco BradescoBBDBanking71.90B9,118,400
Companhia Siderurgica NacionalSIDSteel & Iron23.84B5,271,070
GerdauGGBSteel & Iron19.63B6,453,970
Companhia de Bebidas Das Americas (AMBEV)ABVFood and Beverage29.82B713,025
Centrais Electricas BrasileirasEBRElectric Utilities14.62B701,781
Companhia Paranaense de EnergiaELPElectric Utilities6.25B553,166
Companhia Brasileira de DistribuicaoCBDRetail - Grocery stores8.67B389,206
CPFL EnergiaCPLElectric Utilities11.31B150,843

American companies with a presence in Brazil
Company
Symbol
Sector

Market Cap

($)
Ave Daily Volume




Brazil’s clean energy revolution has been a largely overlooked accomplishment. Renewable energy accounts for more than 85% of domestically-produced energy, and many of the cars on the road run on sugarcane ethanol. In recent years the country has moved into wind power initiatives as well, looking to reduce the heavy reliance on hydroelectric power.

Brahma (brewing and beverages which through a series of acquisitions created Anheuser Busch InBev), Embraer (aircraft production), Votorantim (diversified conglomerate specializing in basic industries), Banco Itaú (banking), Natura (cosmetics), América Latina Logística (logistics), Promon (engineering), Sabó (auto parts), Pão de Açúcar (food retailing), and Aracruz (pulp and paper).

Embraer is the fourth largest aircraft manufacturer in the world, with over twelve thousand employees and $5.5 billion revenues in 2009. By the end of the 1990’s, the company had emerged as one of Brazil’s largest exporters. Over the 1990’s, Embraer won a 40% share of the global market for regional jets, while the market leader Bombardier lost nearly half of its market share over the same period, and number three Fairchild Dornier filed for bankruptcy.


While Brazil maintains strong growth prospects, the economy faces some unique challenges as the central bank takes steps to prevent overheating. Brazil has had challenges with inflation in the past, experiencing hyperinflation in 1994 when the consumer price index exceeded 5,000%.

 

The Economist November 2009 (4 years ago)
The Economist September 28th – October 4th 2013; Latin America and Asia: Has Brazil blown it?

 
The Economist; 10/16/14 and Jan 2016

26 March 2016


Brazil's collapsing GDP growth:
  • 2010: 7.6%
  • 2011: 3.9%
  • 2012: 1.7%
  • 2013: 2.7%
  • 2014: 0.1%
  • 2015: -3.1%
  • 2016: -3.2% 



EWZ 2014-03 monthly (click for live EWZ chart)

EWZ 2013-09 monthly - 6 months earlier

In the 2000s Brazil’s economy was taking off. It barely faltered during the global economic crisis; in 2010 it grew by 7.5%. Yet recently it has stalled. Since 2011 Brazil has managed just 2% annual growth. Its citizens are disgruntled - in June they took to the streets to protest against high living costs, poor public services and the greed and corruption of politicians. Can Dilma Rousseff, Brazil’s president, restart the engines? Will the World Cup and the Olympic games aid Brazil’s recovery, or simply bring more debt?


******
The Economist, Jan 2, 2016
Irredeemable? A former star of the emerging world faces a lost decade
http://www.economist.com/news/briefing/21684778-former-star-emerging-world-faces-lost-decade-irredeemable



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