Would You Run Towards Emerging Market Blood?

Last week, Jair Bolsonaro was stabbed at a campaign rally.

He’s running for president of Brazil. Many call him “the Brazilian Trump.” He’s known for his racist, sexist and homophobic comments. But he might follow Trump’s success. After he recovers from surgery, he’s expected to win the election. That would put him in charge of South America’s biggest economy.

Brazil has been suffering a recession for years. Government scandals and corruption are as common as sunscreen on a Rio de Janeiro beach. Brazil’s stock market has also burned investors for a decade. If you had invested $10,000 in the iShares MSCI Brazil ETF ten years ago, it would be worth about $5,000 today.

Argentina is South America’s second largest economy. And it looks even worse. Argentines are struggling (again) with run-away inflation. According to Trading Economics, inflation for the 12 months ending July 2018 soared more than 30 percent. It’s just one more reason to sell emerging market shares. At least, that’s what many people think.

Image Pixabay

You can read the rest of the article at AssetBuilder

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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1 Response

  1. Shawn says:

    Hey Andrew,

    Another great article. What is your take on interest rates vs. emerging market returns?

    I understand money has been super cheap over the last ten years due to the last recession.

    Are rising interest rates inversely correlated to emerging markets?

    Also, I think you were once against holding emerging markets in your portfolio due to the corruption in many of those countries. I remember your article about revisiting a friend from…I think it was Vietnam and how far he has come with regards to his residence and job stability.

    Are you a proponent of holding about 5% of your equity allocation to EMs or should they be an equal holding of equity?

    Thanks again for the great article.

  2. Barry says:

    $10k invested over ten years now looks to be around $33k return
    https://www.ishares.com/us/products/239612/ishares-msci-brazil-capped-etf

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