- Brazilian stocks have underperformed significantly due to excess fiscal spending, rising inflation, concerns over next year's election, and a collapse in iron ore costs.
- As a result, the MSCI Brazil index trades at a forward price-to-earnings ratio of just 6.5x and a forward dividend yield of 7.3%.
- While the iShares MSCI Brazil ETF pays a dividend yield of just 3.0%, this likely reflects the way in which ETF payments are made and should rise significantly from here.
- The current crisis has a number of similarities to the 2002 crisis but the country's economic fundamentals are much stronger today, largely due to its strengthened external position.
For further details see:
EWZ: Brazil Is A Buy Amid Surging Dividend Yield