Powell's Picks in Emerging Markets: Brazil & India

10/16/2017 5:00 am EST

Focus: ETFS

Jim Powell

Principal Analyst, Global Changes & Opportunities

With the global economy remaining healthy, and with commodity prices once again moving up, two countries look especially attractive: Brazil and India, explains Jim Powell, editor of Global Changes & Opportunities Report

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Although they are already on the move, I think their upturns are still in the early stages.

iShares MSCI Brazil ETF (EWZ)

Brazil’s economy is continuing to claw its way out of the severe slump that hit all developing countries after the global economy entered the Great Recession.

The recoveries won’t be tranquil or fast. However, I think rising profits will come to investors who can live with the roller coaster ride that’s probably on the way.

Since my recommendation of the iShares MSCI Brazil ETF a year ago, prices have been on a roll. From $18.93 in January, the fund is now $41.69, a 120.2% jump. After such a quick gain, a correction is to be expected — and appears to be getting started.


If it continues, we will have an opportunity to get more EWZ at lower prices. I don’t think Brazil’s run is anywhere close to being over.

On the downside, Brazil’s politics resemble a Three Stooges movie. Emotions are high and corruption is rampant. But that’s normal for the country. Brazil’s business community knows how to deal with it.

iShares MSCI India ETF (INDA)

At the same time, I also recommended the iShares MSCI India ETF -– and it has also been doing well. From $26.09 on January 1, INDA is now $32.85, a 25.9% gain.

So far, Brazil has been the better of the two investments. However, India has the world’s second largest population, which gives the country tremendous manufacturing potential, and a gigantic consumer market. The country is also modernizing and seems likely to catch up to China within 20 years.

Whether India ever catches up to China or not, the country is in an earlier stage of development and should see a higher growth rate. It will happen for the same reason that babies grow much faster than adolescents – and adolescents grow faster than adults.

If you would like to have Brazil and India represented in your long-term portfolio — as I think you should — I urge you to split your investment and buy both of them. The funds complement each other and should deliver excellent long-term gains. However, you should expect a bumpy ride.

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