- Brazilian stocks have come under pressure over the past few months amid fears over rising government spending and fears over the upcoming election in 2022.
- While these concerns are certainly valid, they are nothing new, and unlike in many global markets at present, at least risk is being highly rewarded in the case of Brazil.
- The local stock market now yields almost 5%, the currency is undervalued, and Brazilian 5-year local bonds are yielding more than 6% higher than the U.S. in real terms.
- The combination of local equity market strength and a stable BRL strength should see the iShares MSCI Brazil Capped ETF strongly outperform over the coming months and years.
For further details see:
EWZ: Another Panic Driven Opportunity