Time For Brazil: Two Takes, Two Solid Bets & Alternatives (PBR, EWZ, BZF, BRF)

Looks like it is time for Brazil to shine again.  Petroleo Brasileiro S.A. (NYSE: PBR), or Petrobras, managed to get off the world’s largest stock sale.  This appears to be a good event for iShares MSCI Brazil Index (NYSE: EWZ) as the country’s key ETF product, and there may be an alignment of the stars with the broad-based stock market.

Petrobras (NYSE: PBR) priced the largest equity offering ever, right at $67 billion for a whopping 2.3 billion shares at $34.49 per American Depository Share.  ADRs closed down 1.8% Friday at $34.92 and the 52-week range is $31.21 to $53.46.  Thomson Reuters just issued some proprietary analysis showing that Petrbras only needs to be a mediocre offering for Brazil’s BOVESPA to take off.

Our technical analysis affiliate is Adam  Hewison of INO.  He has a big chart call read on iShares MSCI Brazil Index (NYSE: EWZ) that is very bullish here on the ETF.  Hewison’s call: new highs above $100 in the Brazilian ETF, and the audio-video gives many anecdotal data points on this matter.  The current $73.90  price compares  to a 52-week trading range  of $57.18 to $80.93.  The ETF is down by about 1% year to date and net assets are over $9.5 billion.

As far as some alternatives, there is always the currency ETF via the WisdomTree Dreyfus Brazilian Real (NYSE: BZF).  At $28.52, its 52-week range is $24.46 to $28.62.

A second ‘back-up alternative’ play for Brazil could be the Market Vectors Brazil Small-Cap ETF (NYSE: BRF), although at $55.25 its 52-week trading range is $36.86 to $55.78.  This is not exactly tied to Petrobras and is far smaller and less liquid, which you probably gathered by the small-cap aspect of the name.

Sometimes you have the charts…Sometimes you have the fundamentals… Sometimes you get both the charts and the fundamentals on your side.

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JON C. OGG