There are several factors in the Brazilian economy that could make or break the related exchange traded products. Among these, the 2014 FIFA World Cup, a slowing economy, stubborn inflation, a series of rate hikes, high levels of unemployment, excessive red tape and a presidential election are worthy of mention.
Surprisingly, ignoring all other economic drivers, election turned out to be the name of the game in Brazil. Brazil equities ironically gained the day the country announced a technical recession in the first half of this year. Not only this, Brazil equities performed superbly the day after Brazil failed to make it to the World Cup final (read: Ignoring World Cup Loss, Brazil ETFs Tackle Rousseff Concerns).
Basically, each and every failure of Brazil hinted at the diminishing popularity of the present president Dilma Rousseff who is seems unlikely to be re-elected in the upcoming general election on October 5, going by popularity polls.
Bright Days Ahead for Brazilian ETFs?
Brazil's GDP shrank 0.6% in Q2 following a 0.2% contraction in Q1. The FIFA World Cup seemingly failed to give its expected share of boost to the economy. Tumbling investment was held responsible for this growth shrinkage.
Investments fell as much as 5.3% (quarter on quarter) in the second quarter versus 2.8% decline in the first quarter. Notably, fixed investments have been declining for the fourth successive quarter (read: Inside the Continued Brazil ETF Slump).
This technical recession surfaced for the first time since the global financial malaise in 2008–09. Renowned research house Barclays has cut its GDP forecast for Brazil to 0.1% for the year, ...
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