iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ):The Mirror Of Brazil’s Economy

Boston, MA 06/17/2014 (wallstreetpr) – As Brazil became the central focus of soccer fans across the globe, with the World Cup running in the country, the investors are keen to know how the brazilian economy will fair once the World Cup is over. While there are a number of ETFs covering the main companies of Brazil, iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ), in particular is one that comprises large companies like Ambev SA, ItauUnibanco and BancoBradesco SA, and is considered as an important indicator of how the corporates are performing in the region.

Presidential Elections

Once the World Cup fever is over, Brazil will once again be focused for its upcoming presidential elections in October. It is interesting that two opposite things are attached with this development. One that Brazil’s equities could climb by more than 19% if the new President is able to bring market-friendly polcies in force. But, on the other hand, if the new president is challenged by a confidence crisis, then Brazil’s equity could nosedive by as much as 38%, according to J.P. Morgan.

Inflation Crisis; Commodities A savior

However, the research firm is also wary of the existing slow paced growth in the economy. A Reuters report reveals that since the incumbent President DilmaRousseff took charge in 2011, the country’s economy has grown at a rate of 2% on an annual basis. Moreover, the International Monetary Fund, expects the Brazilian economy to grow at a lower rate of 1.8% this year. At the same time, inflation is also likely to remain high at around 7%. Amid all these concerns, the only factor helping the optimism for the region is its ‘commodities’ sector. It is a known fact that Brazil is among the largest producers of coffee-beans, orange juice, sugar, corn and soybeans. Therefore, exports are the only way that can help the country stand up against its sluggish growth.

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