Since emerging markets stocks and exchange traded funds put in a bottom on Feb. 3, the iShares MSCI Brazil Capped ETF (EWZ) has surged nearly 24%, making it the top performer among the four major BRIC single-country ETFs.
It appears investors are finally starting to chase the rally in EWZ, the largest ETF tracking Latin America’s largest economy. On Tuesday, EWZ hauled in $212 million while a comparable iShares product listed in Brazil brought in $72.7 million, Boris Korby and Julia Leite report for Bloomberg.
From April 16 through April 23, EWZ has attracted $317.5 million in new assets, a reversal of the recent trend of outflows seen even as EWZ has been soaring. In the first quarter, EWZ shed $158.4 million and that came after a year in which the ETF was among the 10 worst in terms of annual outflows. [Emerging Markets ETFs Flirt With Breakouts]
From March 3 through April 15, a period in which EWZ surged 15%, investors pulled $705.2 million, displaying a preference for other emerging markets, including Mexico. That despite the fact that the iShares MSCI Mexico Capped ETF (EWW) rose just 6.9% over the same time. Year-to-date, EWZ is up 9% while EWW is down 4.2%. [Investors Pass Over Brazil for Mexico]
“The gap between Mexican and Brazilian flows climbed to $570 million during the first seven business days of April, with $148.7 million of inflows to Mexico and $421.3 million in Brazil outflows,” according to Bloomberg.
Investors have been lured back to Brazil and EWZ as polls have shown waning support for President Dilma Rousseff, implying Brazil’s first female president could be vulnerable to defeat in elections to be held later this year.
Brazilian and foreign investors have soured on Rousseff due to the perception of a heavy-handed approach towards Brazil’s state-run companies and practices that are viewed as hostile to foreign investment.
Since Rousseff took office on Jan. 1, 2011, shares of Brazil’s state-controlled oil giant Petrobras (PBR) have plunged 63.4%, making it the worst-performing major global oil stock listed on a U.S. exchange over that period.
But as Rousseff’s popularity has slid, shares of Petrobras have surged more than 16% in the past three months. Two Petrobras securities combine for 10.2% of EWZ’s weight. [Petrobras Pushes Brazil ETF Lower]
iShares MSCI Brazil Capped ETF