Latin American Value Hunt Continues


Stocks south of the border keep heading north.

The iShares Latin America 40 ETF (ILF) is up 10 percent so far this year, about triple the performance of the S&P 500 over the same period. Unlike the unlike the domestic index, the fund is also above its 50- and 200-day moving averages. That’s a potentially bullish sign.

Brazil is leading the charge as investors embrace the pro-business Bolsonaro administration. However, stocks in Argentina have also ripped higher in an apparent hunt for value in the region.

The gains come at a time of apparent rotation in the broader market as capital shifts from high-profile growth stocks. Investors also seem to be looking for opportunities overseas as a dovish Federal Reserve weighs on the U.S. dollar.

As promised earlier on Market Insights, here are some noteworthy symbols to follow in the region:

  • Companhia de Saneamento (SBS): The Brazilian water utility is up 41 percent so far this year.
  • Centrais Elétricas Brasileiras (EBR): The Brazilian electricity utility is up 32 percent so far this year.
  • Companhia Siderúrgica Nacional (SID): The Brazilian steelmaker is up 20 percent so far this year.
  • Petrobras (PBR): The well known Brazilian oil driller is up 18 percent this year.
  • Mercado Libre (MELI): The Argentine e-commerce stock is up 16 percent so far this year.
  • Azul (AZUL): The Brazilian airline is up 10 percent so far this year.
  • Banco Bradesco (BBD) and Itau Unibanco (ITUB): The Coke and Pepsi of Brazilian finance are up 14 percent and 11 percent, respectively, so far this year.
  • iShares MSCI Brazilian ETF (EWZ): The heavily traded country-tracking fund (which holds companies like PBR, BBD and ITUB) is up 13 percent so far this year.

In conclusion, this list isn’t exhaustive and shouldn’t be interpreted as trade recommendations. We just wanted to highlight some names that have quietly pushed higher following years of underperformance.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.