Helping Self-Directed Investors Succeed Blog - Brazil Needs A Makeover

Brazil Needs a Makeover

March 4th, 2013

Emerging Markets, especially the BRIC markets - had been the haven for investors who were seeking explosive growth a few years ago.

But, the Financial Crisis and its aftermath had changed the dynamics in an interesting way resulting in Developed Markets - especially the US - to outperform the Emerging Market economies substantially.

The first three quarters of 2012 were rough on BRICs. High Inflation, cooling economic growth and irrational exuberance all combined causing investors to shift their asset allocation considerably. Late 2012, and early 2013 have been somewhat positive for BRIC economies again. No matter what happens to the entire BRIC segment as a whole, one economy that could stand to benefit in the next two years is Brazil.

Brazil's economy is probably poised to fire on all cylinders with the country preparing itself for two major, historic sporting events in its history. The 2014 World Cup Soccer and 2016 Summer Olympics are scheduled to be hosted by Brazil. Brazil's infrastructure will need a substantial "makeover" to be able to smoothly host these events which will see a massive influx of tourists from all parts of the world.

In this context, we see BRXX - Emerging Global Shares Brazil Infrastructure ETF - as an important ETF investors may want to keep an eye on as a direct play on a possible economic upgrade. This past week BRXX logged a solid BIR Rating of +42 and its RS Rating jumped from 41 to 72. It also found support above its 10-week SMA. A break-out above the 22 level may be noteworthy.

Good Luck and Happy Trading!

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