Click to Enlarge YTD Return: -21%
Slightly harder-hit than Chile is Brazil and its iShares MSCI Brazil Index ETF (EWZ). That’s because expectations were even higher, and the disappointment has been even more severe now that the ugly inflation beast has battered a once-booming consumer class.
Brazil is dependent on commodities, particularly energy exports, and so the tale of China’s slowdown applies here. But the reason that Brazil has been even harder-hit is that inflation is clocking a roughly 6% annual rate and gutting investment and consumer confidence — the bright spots that led to impressive growth in previous years.
Throw in the struggles at major commodities corporations like oil giant Petrobras (PBR) and mega-miner Vale (VALE) and you understand why things are ugly. In 2012, Brazil’s GDP grew by just 0.9%, the slowest in three years, and 2013 is shaping up to be only marginally better.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.