I am very interested in investing in Brazil, but there is no one on this board.What is the "Real?" Thank you,
The Real is the name of the Brasilian currency. Pronounced "hay-all" for one, "hay-ize" for plural. I live in Rio de Janeiro. I have been investing in Brasil for a couple years now. I would be happy to help answer any questions you have about Brasil or Brasilian investments.
I Picked up EWZ a couple months ago and have watched it trade up and down for a while. It has had a good track record for it's 3 year return ( 56.39% ) The financial sector makes up 16.4% of the fund, and I think this has weighed heavily on it. I am set to hold my position for the next year.
Unlike the US, the financial sector in Brasil is doing well. With consumers spending money, and banks now lending money, this sector has been a positive one for EWZ and should continue to be in 2008.This fund should do well again in 2008. I like that it closes up today, when the Dow and S&P are down. Now, just give us a .75 rate cut and watch this fund take off!
I plan on holding this fund, but does anyone have any thoughts on the recent drop? Also any future splits?
You won't see it split.It is a volatile fund, and can move up or down several percentage points in a matter of hours. Being a BOVESPA index fund, it is strongly affected by dollar flows into and out of Brasil, since those flows are the largest investor component there. Watching the currency exchange can often give you some idea where the fund is going on a near term basis. This fund should recover as the fed rate announcement nears. With the currently anticipated .5 cut, perhaps .75, the dollar will decrease in value against the Real and this increases the value of EWZ in dollar terms. This will likely be fully valued into the price prior to the announcement. Also, there should be a positive reaction for emerging market equities, and with lower US interest rates the spread between US rates and Brasilian rates makes Brasilian returns more attractive, thus bringing more dollars to the Brasilian market and this generally causes equities to appreciate. Immediately following the rate announcement I would exercise caution with this fund, it could become even more volatile until the US markets settle down and investors decide whether they like the rate cut and the proposed recession relief legislation, or not. I am thinking they will not, and result in downward pressure on both US and Brasilian equities for a time. Longer term, this fund should perform well. It's twin backbones, Petrobras and Vale are strong. Brasil itself is doing very well, growing at a sustainable 5% rate, and keeping inflation under control. Brasilian consumers are spending money, and surveys show the highest levels of optimism in Brasilians since the surveys began some 25 years ago.
Good call on the .75 rate cut. It will be interesting to see what happens when the dust settles today. Thanks for your insight! Wolfdaddy
Hey PTR... If you please place a link with calendar (or important dates) for Brasilian economy. I watched Bovespa and index is prone to skyrocket a few times throughout the year. I don't know when and why its growing. Usualy it starts at full hour so it looks like some economic data are release. Thanks man.
thanks for your offer of insight into Brazilian companies and economy. Can you give me your thoughts on ELP? i like that there energy generation is at least partly sustainable (hydro) and less dependent on the gyrations in the oil markets. thanks dude.
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