What Are The Biggest Blockchain And Digital Currency Initiatives In Latin America Right Now?

Latin America: less faith in local currencies

Only 51% of the Latin American (ILF) economy has access to banking services, with political and currency fluctuations repeatedly undermining trust in local currencies. Moreover, increased compliance requirements and costs have caused many traditional financial institutions to exit the market. This phenomenon offers a growth opportunity to automated compliance, blockchain technology innovations, digital currency platforms and cross-border payments systems that help avoid transaction costs.

Blockchain innovation initiatives being taken in Latin America

  • Brazil’s central bank is seeking to investigate possible use cases for blockchain technology and is now moving toward prototyping.
  • Brazilian (EWZ) (CSBR) banks have already trodden the path. Banco Itaú and Banco Bradesco are a part of the R3 consortium. Banco Bradesco is launching pilot projects such as a new digital wallet using blockchain technology in partnership with eWally and Bit.One, to address cross-border payments.
  • Chile’s (ECH) Santiago Exchange and IBM (IBM) have partnered to implement blockchain technology into the country’s financial services sector.
  • Mexico (EWW) based start-up, Bitso secured $2.5 million in funding in early 2017.
  • Mexican venture capital fund, INGIA, invested in Abra, the US blockchain mobile payments startup.
  • In Argentina (ARGT), startups such as Rootcamp provides smart contract solutions for bitcoin technology, while SatoshiTango and Xapo provide bitcoin-based payments solutions.
  • Argentina-based Ripio wants to transform banking on the blockchain with the Ethereum blockchain’s ERC 20 protocol credit network using smart contracts for borrowers, lenders and underwriters.
  • Uruguay is currently experimenting with its own blockchain-based digital currency, according to a statement made by the Banco Central del Uruguay’s (BDC) chief, Mario Bergara.
  • Cryptobuyer, a leading cryptocurrency (ARKW) (ARKK), and digital assets company in the Latin America is the first company ever to install Bitcoin ATMs (BTMs) in a commercial bank (Banistmo Bank’s headquarters).

Cobalt Prices Are Up 80%, Emerging Market Miners Gear Up To Address Shortage

Cobalt prices up 80% YTD, no reversal yet

Cobalt prices are up over 80% in the year so far. They’ve recorded a 112.5% rise over the past one year, thanks to the rapid rise in the adoption and usage of electric vehicles and consequently, the global lithium-ion battery market. Cobalt is a critical input in lithium-ion cell production accounting for 20% of its composition. The battery industry consumes over 40% of global cobalt production.

What led the price so high?

With the global lithium-ion batteries poised to become a $40 billion market by 2025 (Goldman Sachs (GS) estimate), demand for cobalt should continue to rise. According to estimates, the demand for cobalt is set to increase by 34% per year until 2026. However, the supply side of this key ingredient seems low, with battery makers struggling to secure supplies. This has driven prices up to where they are now (see chart above), affecting battery makers such as Tesla (TSLA), BYD (BYDDF) (BYDDY), CATL, and Tianjin Lishen, LG Chem (LGCLF), Samsung SDI (SSDIF), and SK Innovation, among others.

The price hike has been driven by higher demand and a supply shortage on account of the unstable political situation in the Democratic Republic of Congo (DRC), which accounts for nearly 60% of the world’s cobalt production. In 2016, DRC produced 66,000 metric tons of cobalt, more than eight times more than its closest competitor, China (FXI) (YINN).

Rising demand for EVs to add to demand cobalt

Macquarie Research has predicted that trouble in the DRC and rising demand for electric vehicles will lead to a four-year-long cobalt shortage. However, since approximately 97% of the world’s supply of cobalt comes as a by-product of nickel or copper, as long as the demand for nickel and copper remains sufficient, so would cobalt production.

Meanwhile, cobalt-rich economies and cobalt miners are eyeing additional reserves and deposits to address the shortfall in supply.

  • Chile (ECH) is conducting surveys in its Atacama and Coquimbo region in search of cobalt deposits.
  • First Cobalt (FTSSF), a Canadian mining company, is looking to expand its footprint in Cobalt, Toronto.

Prominent cobalt miners include Glencore (GLNCY) (GLCNF), China Molybdenum (CMCLF), Katanga Mining (KATFF).

Meanwhile, to hedge their exposures, battery makers are working on ways to reduce their dependence on cobalt as prices rapidly rise.

Inaccessible Markets: Which Frontier And Emerging Countries May Soon Be Tracked By More ETFs

Of the 24 countries classified as emerging markets by MSCI, there are 13 which have only a single dedicated ETF available to US investors. The list includes major markets like South Africa, which houses the sixth largest stock exchange in emerging markets and has a market cap of over $1 trillion.

The iShares MSCI South Africa ETF (EZA) – the only ETF tracking the South African market that is traded on US exchanges – tracks the MSCI South Africa Index, which is comprised of 53 constituents. There are no sector or theme-based funds tracking the market even though there are 18 indices on the local exchange, according to Bloomberg data.

The MSCI South Africa IMI Index, which has 111 constituents across various market caps could be an interesting option for an ETF with an even broader based exposure to a market which is currently underrepresented.

It’s not to say that ETFs investing in South Africa or other countries with just one dedicated fund like Chile are not attracting investor interest. Aside from the six largest Chinese ETFs out of the 31 funds focused on China (KBA) (PEK), the EZA and iShares MSCI Chile Capped ETF (ECH) are bigger than all others. They are larger than ETFs investing in Argentina (ARGT) (AGT) and Colombia (GXG) (ICOL) as well, both of which have two ETFs each tracking their markets.

In the graph above, single country ETFs like that for Turkey (TUR), Thailand (THD), and a frontier market like Vietnam (VNM) all feature among the largest funds in this segment.

Untouched corners

The MSCI country indices for Hungary and Czech Republic, both emerging markets, have done well in YTD 2017, having returned 35% and 18% respectively. However, there are not currently ETFs listed on US markets that would allow investors to partake in the strong performance of these countries.

The broad-based fund route does not help either. The most exposure one could get for these countries is 4.7% for Hungary and 2.5% for Czech Republic.

As far as frontier markets are concerned, there are only three countries with dedicated ETFs out of the 33 that MSCI classifies in that category – Argentina, Vietnam, and Nigeria.

Time for a relook?

There remains noticeable pockets in the frontier and emerging markets universe that can be turned into investment avenues.

Investor interest should not be a big hurdle, as the lone ETFs tracking some of the larger markets have had good traction and are considerably larger than a majority of funds tracking much bigger and popular markets.

The launch of the AGT in April this year made Argentina the first frontier market to have two ETFs tracking it. Its asset size growth would be of interest to fund companies looking at launching single-country funds for similar or even larger markets except for China, India, and Brazil.

Thus, it may be time to relook at the present offerings and think about deepening the number and scope of offerings for markets which have done well over the medium to long-term and can thus find traction.

After Weathering the Storm Earlier This Year, What Will Drive Peru’s Stock Market?

In the first article of this series, we explored the stocks which have been holding back the broader stock market and exchange-traded funds investing in Peru. Meanwhile, the second article details issues facing the country and how it’s dealing with them.

So what do these components combined say about the outlook for Peruvian equities?

Short-term pain

Continued short-term pain for stocks from the country is likely, primarily due to reduced overseas investment in light of the ongoing investigations in the Odebrecht scandal involving previous administrations of the nation.

Meanwhile, investors would also like to see tangible signs of implementation of the government’s plan for rebuilding the country after being hit by severe floods earlier this year.

Another aspect which could hurt investment at least in the short-term is the political challenge faced by the country.

The government led by President Pedro Pablo Kuczynski is not yet a year old but has already seen three ministers – Jaime Saavedra (Education), Martin Vizcarra (Transport), and Alfredo Thorne (Finance) – being sacked by the congress. A similar fate probably awaits the Interior Minister Carlos Basombrío.

Thorne is the latest casualty in the $530 million Chinchero International Airport project contract matter which was also responsible for Vizcarra’s ouster. Kuczynski has named Prime Minister Fernando Zavala as Thorne’s replacement.

Political investigations such as this will continue to keep investors at bay for the short-term.

An economy with potential

Though the country is struggling to grow at present, it is considered to be among the most robust in Latin America.

Apart from the efforts the government is making to get the economy back on track and tackle the corruption scandal, it has another component which can help it bounce back — monetary policy.

The central bank reduced rates in May for the first time in over two years by 25 basis points, but held on to the 4% level at the meeting in June. Central bank President Julio Velarde has said that the institution will wait for the “right moment” to further reduce rates, preferably once credit demand is rising.

Outlook on equities

The table above lists the price-to-earnings (P/E) ratios of the ETFs tracking the five major emerging market economies of Latin America. While Brazil (EWZ) is the cheapest, Mexico (EWW) is the most expensive. Peru (EPU) is in the middle, between Chile (ECH) and Colombia (ICOL).

Peruvian equities may continue witnessing some headwinds in the short-term. Moderate risk-taking investors might want to wait for these headwinds to pass before initiating or adding to their stock holdings from the country.

However, more adventurous investors would find current valuations quite attractive and may initiate small buying positions. Those investors not taking the fund route need to steer clear of all firms which have connections to the Odebrecht scandal though.

These Are The 5 Equities Holding The Peruvian Stock Market Back In 2017

Peruvian equities have been facing a number of headwinds in 2017. After a strong start to the year which saw the iShares MSCI All Peru Capped ETF (EPU) climb 11% by early February, the ETF has lost a lot of ground and is up only 4.4% for the year to June 22.

This performance places it better than only Brazil among the five countries included in the MSCI Emerging Markets Latin America Index.

The iShares MSCI Brazil Capped ETF (EWZ) is nearly flat for the year. Its performance has driven down the entire EM Latin America Index as it forms a mammoth 55.5% of the exposure of the Index. Meanwhile, Peru forms only 2.9% – the smallest allocation of the five countries.

The EPU is neck-and neck with the Global X MSCI Colombia ETF (GXG) and far behind the iShares MSCI Chile Capped ETF (ECH) and the iShares MSCI Mexico Capped ETF (EWW).

The stocks which have hurt the EPU

Industrials is the sector which has hurt the fund the most so far in 2017. Of the two holdings from the sector, engineering and construction major Graña y Montero S.A.A. (GRAM) has been the biggest negative contributor to the fund. In terms of total returns, the stock has plummeted 54.7% in YTD 2017 (in Peruvian Sol terms). However, since it forms only approximately 2% of the fund, the impact has been somewhat contained.

The second biggest negative contributor comes from the consumer staples sector. Multi-format retailer InRetail Perú Corp is one of the three holdings from the sector in the EPU and forms 3.1% of the fund. The stock is down 8.8% on the year, and has dragged down the positive contribution by the top holding from the sector – Alicorp S.A.A.

The third worst performer in 2017 so far comes from the materials sector. FOSSAL S.A.A. is a spin-off from cement-maker Cementos Pacasmayo S.A.A. (CPAC). The stock is no longer part of EPU’s portfolio, but its poor performance this year still makes it the third largest negative contributor to the fund.

The next two poorest performing stocks come from the utilities sector. Utilities follow industrials as the second worst performing sector with both holdings – Luz del Sur S.A.A. and Enel Distribución Perú S.A.A. in that order – dragging on the fund.

Let’s look at the headwinds which have held Peruvian equities back on a broader level in the next article.

After A Good Run In YTD 2017, Is A Peak For Chile Stocks Near?

Chile is the second best performing stock market in the Latin America region behind Mexico in 2017. The MSCI Chile Index has risen 14% for the year, trailing Mexico’s 19.4% return.

The iShares MSCI Chile Capped ETF (ECH) – the sole ETF traded on US exchanges which invests exclusively in Chilean equities – has risen 16% for the year. Meanwhile, Chilean equities form 35% of the portfolio of the Global X FTSE Andean 40 ETF (AND).

The ECH has been led upwards this year by the utilities, materials, and financials sectors, in that order.

All holdings from the utilities sector have contributed positively to the fund, led by Enel Américas S.A. (ENIA) and supported by Enel Chile S.A. (ENIC) and Enel Generación Chile S.A. (EOCC).

All holdings from the materials sector have also boosted the funds performance. The sector has been led by Sociedad Química y Minera de Chile S.A. (SQM).

Meanwhile, financials have been powered by Banco Santander-Chile (BSAC).

View on Chile stocks

The Chile-listed It Now IPSA ETF has attracted inflows worth $2.5 million in YTD 2017 according to Bloomberg data. Conversely, US investors have not taken much interest in US-listed ECH, with the fund witnessing net outflows to the tune of $864,500 so far this year.

One of the reasons for the lack of interest is that the $447.5 million ECH is not quite cheap at a price-to-earnings ratio of 17.67. There are less expensive options available in Latin America such as Colombia.

Also, several brokerages have a negative view on Chilean equities.

According to Bloomberg, HSBC is keeping Chile stocks at ‘underweight’ and has liquidated LATAM Airlines Group S.A. (LFL) and reduced exposure to SQM – the now sole holding from Chile – in its model portfolio.

Meanwhile, while Itau has eliminated Chilean equities from its portfolio as it considers the market to be expensive. Citigroup has reduced its exposure to the country to ‘market weight’ citing similar reasons.

On the other hand, Morgan Stanley remains overweight on Chilean stocks as they view them to be cheap among the broader spectrum of emerging markets. Further, they believe that the election in November may lead to improved macro policy, and the political outlook is not completely priced-in yet.

Though a sell-off, especially via an ETF, may not be immediately warranted, adding exposure at this point should be done selectively.

Why Peru and Colombia Have a Higher Spread of Profitability than Emerging Markets Globally

Higher profitability + idiosyncratic opportunities

Felipe Asenjo, regional head of equities at SURA Asset Management sees valuable investment opportunities in the Pacific Alliance countries of Mexico (EWW), Chile (ECH), Columbia (ICOL) and Peru (EPU). Asenjo expects companies in these regions to grow at 17% CAGR over the next 3 years. “The Pacific alliance has always had a higher spread of profitability than global emerging markets… the second region in the world in the last 15 years with the highest delivery of earnings growth,” said Asenjo.

Meanwhile, Diana Kiluta Amoa, senior portfolio manager on the local-currency team at JP Morgan (JPM) Asset Management sees idiosyncratic investment opportunities in Peru and Colombia.

[stockdio-historical-chart stockExchange=”NYSENasdaq” width=”100%” symbol=”EPU” displayPrices=”Lines” performance=”false” from=”2017-01-01″ to=”2017-05-16″ allowPeriodChange=”true” height=”350px” culture=”English-US”]


Private investment in Peru (EPU) is expected to bounce back and grow 0.5% in 2017 and gradually reach 6.5% growth by 2021, according to the Economy and Finance Ministry. The Ministry expects greater infrastructure investment due to the resumption of projects linked to Brazilian enterprises, to be the primary driver of such growth. The agency also expects increased mining activity to boost private investment. The Finance Ministry also forecasts public investment to rise by 15% in 2017 and in 2018.

The Peruvian economy has already shown its resilience towards the El Niño phenomenon (causing heavy rains and flooding), by slowing less than expected. Prudent actions taken by the central bank such as cutting interest rates should “boost activity” and put Peru on track towards an expected 3% overall economic growth, claims Prime Minister Fernando Zavala.

[stockdio-historical-chart stockExchange=”NYSENasdaq” width=”100%” symbol=”ICOL” displayPrices=”Lines” performance=”false” from=”2017-01-01″ to=”2017-05-16″ allowPeriodChange=”true” height=”350px” culture=”English-US”]


According to Santiago Angel, head of the Colombian Mining Association, enormous potential lies on offer in the mining industry (XME) in Colombia (ICOL), which serves as a major growth engine for the economy. Angel sees the industry bringing in a whopping $1.5 billion in 2017 and $1.7 billion in 2018, with a five-year investment of $7.5 billion; provided the government guarantees legal certainty to businesses. Coal (KOL), gold (GLD), and copper (COPX) remain the three main mining sectors in Colombia.

AngloGold (AU) and Eco Oro Minerals (GYSLF) are the larger players in Colombia’s gold sector. The biggest coal companies are Drummond, Glencore (GLNCY) (GLNCF), Murray Energy, Colombia Natural Resources, and Cerrejon, which is jointly owned by BHP Billiton (BHP), Anglo American Plc (AAUKF) and Glencore.

This Nation Has One of the Healthiest Mortgage Markets in Latin America

Mortgage market in Chile

Chile (ECH) is among a handful of Latin American (ILF) markets poised for growth and urbanization. The scale of middle-class expansion in Chile is noteworthy. This is also giving the required boost to real estate and infrastructure investment in the economy.

[stockdio-historical-chart stockExchange=”NYSENasdaq” width=”100%” symbol=”ECH” displayPrices=”Lines” performance=”false” from=”2017-01-01″ to=”2017-05-11″ allowPeriodChange=”true” height=”350px” culture=”English-US”]

Chile boasts one of the healthiest and largest mortgage markets in Latin America. The mortgage market makes a solid 22-23% contribution to the economy’s GDP, as compared to the 9% contribution that Brazil’s (EWZ) real estate market has towards its GDP. The rating agency Moody’s has a positive outlook on Banco del Estado de Chile, the largest mortgage lender in the economy. The bank is 100% owned by the Republic of Chile. It plays an important public policy role by catering to low-income individuals with an explicit mandate towards promoting home ownership. The bank has ample holdings of high-quality liquid assets and its non-performing assets ratio has also been declining.

Economic indicators shed positive light

Housing starts in Chile had also crossed 12,000 in March 2017, well above the near 8,000 per month level seen for the majority of 2016. Consumer spending is also rising, which is again a good sign for real estate development. The stock market, as tracked by the iShares MSCI Chile Capped ETF (ECH) is up about 15% YTD (as of May 11).

Chilean (ECH) infrastructure has contributed notably to the above 10% growth recorded by the iShares Emerging Markets Infrastructure ETF (EMIF) so far this year. Equity that was part of the ETF gained 24.2% YTD (as of May 5). Chile’s Enel Americas SA (ENIA) was the sole contributor to the return.

Infrastructure Binge in Latin America Yields Big Returns To ETFs

Infrastructure ETF yielded over 10% YTD

The iShares Emerging Markets Infrastructure ETF (EMIF) is up 10.9% YTD (as of May 5). The fund currently has over $47 million in assets under management and invests in an index composed of 30 of the largest emerging market equities (EEM) (VWO) in the infrastructure industry, the S&P Emerging Markets Infrastructure Index.  The ETF is heavy on Brazil (EWZ), Hong Kong, and China (FXI) (YINN), which command 23.8%, 20.56%, and 13.5% respectively, of the EMIF portfolio.

[stockdio-historical-chart stockExchange=”NYSENasdaq” width=”100%” symbol=”EMIF” displayPrices=”Lines” performance=”false” from=”2017-01-01″ to=”2017-05-11″ allowPeriodChange=”true” height=”350px” culture=”English-US”]

Top emerging market performers: Mexico, Chile & China

Deeper insight into the ETF’s YTD performance indicated that the ETFs performance was largely driven by Mexico (EWW) infrastructure equity which returned 32.3% YTD. The three ADRs of the company Grupo Aeroportuario gave the required boost to the portfolio’s performance. Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB), Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC), and Grupo Aeroportuario del Sureste, S. A. B. de C. V. (ASR) have returned 30.3%, 27.6%, and 38.2%, respectively YTD.

Chile (ECH) infrastructure equity gained 24.2% YTD. Chile’s Enel Americas SA (ENIA) was the sole contributor to the return. Hong Kong and China infrastructure equity stand next, with a 13.2% and 12.6% return respectively, YTD. From China, Beijing Capital International Airport (BJCHF) (BJCHY) has risen 38.5%, while Zhejiang Expressway (ZHEXY) has returned 29.2% YTD.

Investing in infrastructure could be expensive

From a valuation perspective, infrastructure equity across the best-performing markets is currently very expensive. Mexico maintains a 27.2 price to earnings (P/E) multiple, while Chile, Hong Kong, and China are trading at a 26.8, 15.6, and 33.0 P/E respectively.  Among these, Chinese infrastructure equity offers the highest dividend yield of 3.7%.

From our analysis of these two ETFs, we see China and Mexico as major contributors to the surge in emerging market real estate indices. We also see Mexico and Chile contributing most substantially to the rise in emerging market infrastructure equity. We’ll reveal more perspective on each of these markets as we move ahead in this series.

Why Money Managers Are Rejigging Their Latin America Portfolios From Mexico To Brazil


Strong inflows into Brazil ETFs; Outflows from Mexico

Brazil’s efforts to revive the recession-stricken economy are closely monitored by fund managers and institutional investors. Meanwhile, Mexico continues to struggle under Trump’s uncertain protectionist policies. Venezuela and Chile are also reeling from political issues. However, Latin American funds have seen strong inflows in 2017 as expectations of structural reforms drive inflows into the region.

Among the funds investing in Latin America, the iShares Latin America 40 ETF(ILF) has seen the highest inflows, amounting to $378 million since 2016. Comparatively, the SPDR S&P Emerging Latin America ETF (GML) has received a mere $1.5 million inflows during the same period. Year to date these funds have received inflows of $133 million and $5.1 million, respectively.

Foreign investors are also betting on individual countries in the Latin American continent even though many are braving poor economic growth and political tensions.

Investor interest in Brazilian equities has been high given lofty inflows over the past one year standing at $1.8 billion. YTD investors have plowed in $795 million in the iShares MSCI Brazil Capped ETF (EWZ).

In contrast, Mexico has seen heavy outflows in 2017 as Trump’s anti-migrant policies have hampered foreign interest in the country. YTD investors have redeemed $813 million from the iShares MSCI Mexico Capped ETF (EWW).

5 Latin American Stocks That Analysts Are Placing Their Bets On

Analysts’ recommendations

Analysts believe Latin American economies including Mexico (EWW), Brazil (EWZ) and Argentina (ARGT) are currently trading at cheap valuations and are bullish on domestic sectors like retail and infrastructure. Within materials, analysts favor iron ore miners and pulp & paper producers over copper miners and steel producers and have an underweight position in oil & gas.

Analyst estimates tend to drive short-term movements of stocks. Changes in ratings and estimates guide investors towards what markets are expecting from a particular company. The table above lists the ratings and 12-month target prices of some stocks in Latin America.

Analysts are most bullish on Grupo Financiero Banorte-O (GFNORTEO), Credicorp (BAP), Walmart De Mexico (WMT), Embraer Sa-Spon ADR (ERJ) and Aldar Properties (ALDAR) as these stocks have received more than 80% buy ratings, and few sell ratings. Aramex (ARMX) has a consensus target price of USD $1.28 resulting in a return potential of 14.7% over the next 12 months, highest among its peers.

Analysts are most bearish on Eco Petrol ADR (EC), Southern Copper (SCCO), and Emirates Telecom (ETISALAT) as these stocks have received the highest number of sell ratings. Eco Petrol has received just 3 buy ratings, 8 hold ratings and 9 sell ratings while Southern Copper has received 3 buy ratings, 8 sell ratings, and 11 hold ratings. Emirates Telecom has received 2 buy ratings, 2 hold ratings and 7 sell ratings. These stocks have a return potential of 2.9%, -9.2% and 4.4%, respectively, over the next 12 months.

The Best And Worst ETFs For Investing in Latin America

Investing in Latin American equities

Directly investing in Latin American markets can be risky for foreign investors as most of the countries are frontier markets. ETFs investing in Latin America stock markets are largely concentrated in two major markets – Brazil and Mexico. While some countries have opened up their stock markets to foreign investors, these economies remain difficult to access due to illiquidity and poor trading exchanges.

Investors betting on the revival of Latin American economies have two options. They can either consider investing in ETFs providing exposure to the entire Latin American region or place their bets in the continent’s largest markets through country-focused ETFs.

Regional ETFs

The iShares Latin America 40 ETF (ILF) provides exposure to the overall Latin American region but 80% of its holdings are concentrated in Brazil and Mexico, followed by Chile, Peru and Colombia. It invests in a portfolio of the 40 largest companies in the region, which are more than 50% dedicated to the financial and consumer defensive sectors. YTD, this ETF has climbed up 14%.

Another popular Latin American ETF is the SPDR S&P Emerging Latin America ETF (GML). This ETF invests in a basket of 245 stocks, thereby providing larger exposure to various stocks in the region. YTD this ETF has gained 15.1%.

Country ETFs

Investors seeking concentrated exposure in specific countries can consider investing in the following country ETFs:

  • iShares MSCI Brazil Capped ETF (EWZ)
  • iShares MSCI Mexico Capped ETF (EWW)
  • iShares MSCI Chile Capped ETF (ECH)
  • Global X MSCI Argentina ETF (ARGT)
  • iShares MSCI All Peru Capped ETF (EPU)
  • iShares MSCI Colombia Capped ETF (ICOL)

ETFs investing in Brazil have outperformed in the last two years as the country continues to recover from a recession. YTD the iShares MSCI Brazil Capped ETF has gained 13.4% as investors are pinning their hopes on reforms in a recession-struck country.