Brazil’s growth story
Brazil (EWZ) (BRZU) is a favorite emerging market (EEM) (VWO) (EDC) for Mark Mobius. According to Mobius, there are tremendous opportunities in Brazil. In early 1990, inflation was too high. Since then, the country has gone through huge changes. Now, political instability is causing more volatility in the economy. He also said that “A great time to invest is when there’s been a lot of uncertainty, the chances of Dilma being impeached is very high.”
Demographics are important indicators that will drive growth in Brazil’s economy. The country has a younger population than developed nations (EFA) such as the US (QQQ), the Eurozone (VGK), and Japan (EWJ). A younger population signals that consumer demand in its economy should improve in the near future. An aging population generally reflects a fall in demand. This hampers a country’s economic growth. However, Brazil is witnessing a rise in the demand outlook. It will drive growth in the economy.
Reversal in commodity prices
The recent reversal in commodity prices boosted the performance of the Brazilian index. The iShares MSCI Brazil Capped ETF (EWZ) tracks the performance of Brazil’s economy. It returned 60% from its low of $17.33 on January 21, 2016, as of May 13, 2016. EWZ outperformed all of the major developed market (EFA) ETFs such as the United States (SPY), Europe (VGK) (EZU), Japan (EWJ), and emerging economies (EEM) (VWO) such as China (FXI) and India (INDA). Read A Quantitative Look at Brazil’s Recent Performance to find out more about what valuations indicate for Brazil.
Latin American economies
Mobius also has a positive stance on other Latin American (ILF) economies such as Colombia (ICOL), Peru (EPU), and Chile (ECH). However, he has a negative stance on Bolivia. The economic conditions in Bolivia aren’t good. The government isn’t providing support to do business smoothly in the economy.
In the next part, we’ll analyze Mark Mobius’s stance towards China.