Brazil funds held their election gain through Friday
The iShares small-cap Brazil fund rose 24.5% in the week ended Friday, October 9, against 1.2% for the S&P 500 fund.
Key takeaways
Leaving out leveraged and inverse funds, Brazilian stock funds led the week, and the gain from Sunday's election was still in the prices on Friday. The iShares MSCI Brazil Small-Cap ETF, EWZS, rose 24.5%. The iShares MSCI Brazil ETF, EWZ, rose 14.0%. The State Street SPDR S&P 500 ETF, SPY, rose 1.2%.
The figures run from the close on Friday, October 2, to the close on Friday, October 9.
After the first round
Sunday, October 4, was the first round of Brazil's presidential election. With nearly all votes counted, Senator Flávio Bolsonaro, son of former president Jair Bolsonaro, had 47% to President Luiz Inácio Lula da Silva's 45%, the BBC reported. Neither had the majority needed to win in one round. They meet again on Sunday, October 25.
Lula had been polling slightly ahead, and Reuters said Bolsonaro's result exceeded private poll predictions. "The market wants change, it wants reform, it doesn't want a high public deficit; with the current government, all of this will continue," Pedro Galdi, an investment analyst at AGF Investments, told Reuters.
Bloomberg reported Wednesday, citing Brazil's B3 exchange, a record $2 billion single-day inflow into Brazilian stocks, on hopes he would deal with the government's deficit and open the way to lower interest rates if he is elected.
Other Brazil funds moved with EWZ. The Franklin FTSE Brazil ETF, FLBR, rose 13.6%.
Where Brazil was only the largest part of the fund, the gain was smaller. The iShares Latin America 40 ETF, ILF, and the Franklin FTSE Latin America ETF, FLLA, each rose 9.1%. The iShares MSCI Emerging Markets ETF, EEM, fell 1.3%. The move did not spread to emerging markets as a group.
Brazil funds rose; the broad EM fund did not
Counted in New York
The stock moves that follow are New York listings, in dollars. They include the move in Brazil's currency, the real, which Reuters reported strengthened 4.1% on Monday, to around 5 per dollar. Itaú Unibanco, a large holding, shows the gap: its São Paulo shares rose 12.6%, and the New York listing rose 18.3%.
Financial companies are 34% of EWZ. Nu Holdings, the largest holding, rose 20% in New York, and Petrobras, the oil company, rose 16.9% there.
Vale, the iron-ore miner, did not join that move. Its New York shares fell 1.0% on the week, after rising on Monday and falling 3.3% on Wednesday. The Rio Times reported that day that investors were weighing weaker Chinese steel output.
XP Inc., a brokerage and a smaller holding, rose 49.9%, to $32.22.
The rest of the week
The other double-digit gain was freight, not the election. The Breakwave Tanker Shipping ETF, BWET, rose 14.4%. It holds futures on the cost of shipping crude from the Middle East Gulf to China, so the gain is in the shipping rate, not in the oil.
It rose on four of the five sessions and fell 1.4% on Friday. Reuters reported that day that rates for the largest crude carriers are at record highs, with shipping through the Strait of Hormuz, the lane out of the Persian Gulf, still disrupted.
The utilities gain sat in three power companies, not in the sector as a whole. The Virtus Reaves Utilities ETF, UTES, rose 7.4%, against 4.0% for the State Street Utilities Select Sector SPDR ETF, XLU. Constellation Energy rose 15.8% on the week, Talen Energy 18.0% and Vistra 15.3%. Together they are 37% of the Virtus fund.
Bitcoin miners fell further than bitcoin. The CoinShares Bitcoin Mining ETF, WGMI, fell 11.2%, against 2.5% for the iShares Bitcoin Trust ETF, IBIT.
An options fund tied to one of those miners fell further still. The share price of the YieldMax MARA Option Income Strategy ETF, MARO, fell 15.4%, and Marathon Digital Holdings fell 14.1%. Both were down on Wednesday, Thursday and Friday.
The iShares Semiconductor ETF, SOXX, fell 5.0% on the week, including 3.4% on Thursday. Reuters said semiconductor and AI-related shares were under pressure after a report questioned OpenAI's revenue.
Monday was only the start
EWZ rose 12.5% on Monday, to $42.98, and closed Friday at $43.54, just 1.3% above that Monday close. Most of its gain arrived on the first day.
EWZS kept climbing after EWZ's Monday jump
- EWZS · 17.05
- EWZ · 43.54
EWZS rose 14.8% on Monday and then added 8.4% by Friday, including 4.4% on Friday, and closed at $17.05, a penny under its 52-week high. It holds $318 million, against $11.3 billion in EWZ. The large fund had its move on Monday. The smaller one was still climbing on Friday.
ETFs in this story
Frequently asked questions
How much did the Brazil funds rise?
The iShares MSCI Brazil Small-Cap ETF rose 24.5%, and the iShares MSCI Brazil ETF rose 14.0%.
Is the election settled?
Neither candidate had the majority to win in one round, so they meet again on Sunday, October 25.
Did the Monday jump hold through Friday?
The iShares MSCI Brazil ETF closed Friday just 1.3% above its Monday close, while the small-cap fund added 8.4% after Monday.
Did the gain spread past Brazil?
The two Latin America funds each rose 9.1%, and the iShares MSCI Emerging Markets ETF fell 1.3%.
