Brazil’s Market Position Halved in Global Index
The Brazilian stock market’s 19.5% drop in the Ibovespa this year may lead to its reduced role in the MSCI Emerging Markets Index.
This rebalancing is expected in mid-August and may negatively impact Brazilian investments.
Currently, Brazil holds a 4.66% share in the MSCI EM, significantly lower than its past share of over 10%.
China and India, however, have seen their shares increase to 35-40% and 10-12%, respectively.
Also smaller countries, like South Korea and Taiwan, each hold more than 10% of the market share.
The rebalancing aims to reflect the performance and sector weight of emerging markets accurately.
Experts predict Brazilian companies will lose ground, facing a tough outlook for the second half of the year.
Brazilian firms are losing market value, especially in dollar terms, while companies in other emerging markets perform better.
For instance, China’s Shanghai Index has risen about 1% in 2024, and India’s NIFTY 50 has gained over 11%.
This trend suggests Brazilian assets will shrink in comparison as the index adjusts.
Marcelo Vieira, head of equities at Ville Capital, explains the process: “The rebalancing keeps the index aligned with market performance, scope, and sector weights.”
In addition to market value loss, Brazilian trading volumes have decreased. The Ibovespa has struggled with low liquidity since the year’s start, with B3’s volume down 27%.
Commodity companies like Vale (VALE3) have had a negative 2024, while tech firms, dominant in China, are on the rise.
The growing influence of passive management adds to these challenges. ETFs that replicate the MSCI Emerging Markets Index, such as iShares, have significant capitalizations, influencing global investment flows.
Passive management is gaining traction over active management due to similar performance and lower fees.
In 2023, passive funds accounted for over 53% of U.S.-domiciled assets, potentially reaching 60% by 2024.
Changes in the index’s allocation impact all countries involved, leading to resource inflows or outflows accordingly.
By the end of June, B3 recorded a foreign outflow exceeding R$40 ($7.2) billion, highlighting the broader implications of these market dynamics.
Share in MSCI EM Index
- China: Roughly 35 -40%
- India: Around 10-12%
- South Korea: Approximately 12-14%
- Taiwan: Around 12-13%
- Brazil: About 4-5%
- South Africa: Roughly 3-4%
- Russia: Previously around 3-4% (Note: Russian stocks may currently have a lower or zero share due to geopolitical issues and sanctions.)
- Mexico: Approximately 2-3%
- Thailand: About 2-3%
- Malaysia: Roughly 1-2%
- Indonesia: Around 1-2%
- Turkey: Approximately 0.5-1%
More: Brazil news in English, every day from The Rio Times.
Live Market IntelligenceBrazil — Live Market Board
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Brazil — Live Market Board
+7.70%
206,911.89
+7.70%
64,531.68
+1.10%
11,124.65
+1.91%
2,869,488
+3.68%
2,582.65
+2.69%
59,860.04
+0.60%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 206,911.89 | +7.70% | +21.85% | 192,114.55 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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