Emerging Markets, Funds / ETFs

Can Brazilian Automakers Get Any Worse?

Brazil FlagBrazilian automakers have been struggling recently and are facing the toughest period of time since 1999. The industry registered the sharpest slowdown since then.

“It looks like the market is in for a difficult time until 2016,” said Koji Kondo, Toyota Motor Corp’s  CEO in Brazil. Labor costs, rising taxes and infrastructure are the crucial and persistent bottlenecks. “It’s hard for Brazil’s economic conditions to recover in the short term.” he added.

Only this year the sales of cars and light trucks have fallen 9% so far on a year to year basis. Demand slows down due to tighter credit and very weak consumer confidence. Local carmakers have created a glut of inventory.

The auto industry  contributes a quarter of Brazil’s industrial production.

Investors can access the Brazilian stock market via the flagship iShares MSCI Brazil ETF (EWZ) which is more than $5bn in size. Other smaller, more niche ETFs, offer exposure to more specific themes like:

  • Small Caps – Market Vectors Brazil Small-Cap ETF (BRF) or iShares MSCI Brazil Small Cap Index Fund (EWZS)
  • Infrastructure – EGShares Brazil Infrastructure (BRXX)
  • Consumer – Global X Brazil Consumer ETF (BRAQ)

Source: Reuters, ETF Database


Please familiarize yourself with our DISCLAIMERS every time you engage the site: they’re updated constantly without notice. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. ETFalpha clients don’t own any shares of Brazilian ETF’s at the moment of writing this article.

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