- The Brazilian market in general and the small-cap echelon represented by EWZS, in particular, have seen robust gains this year, in sharp contrast to the struggling U.S. bellwether indices.
- The Brazilian real has finally hit its stride, supported by the commodity prices and the hawkish central bank. The problem is that the outlook is not totally cloudless right now.
- EWZS has poor risk-adjusted returns, so its YTD success should be assessed with a broader context in mind.
- The market may finally turn from pricing in a commodities rally to adjusting asset values for the political risk. That being said, I arrive at a Hold rating.
For further details see:
EWZS: Outperformance So Far, But Dangers Lurk