Franklin FTSE Brazil ETF

FLBR

Market cap $537M

The iShares MSCI Brazil ETF (NYSEARCA:EWZ) is the reflex trade for U.S.

I reiterate a buy rating and strong preference for the Franklin FTSE Brazil ETF over iShares MSCI Brazil ETF. FLBR offers greater diversification, a higher dividend yield (5.77% vs. 3.78%), and a lower expense ratio (0.19% vs. 0.59%). FLBR is more aligned with the Brazilian equities thesis: commodity exposure, hard asset sensitivity, and attractive valuation (8x earnings vs. EWZ's 8.5x).

Brazil's ethanol and sugar producers on Thursday despaired at the imposition of new 25% tariffs on Brazilian goods by the U.S. government, ​lamenting a rollback in cooperation between the two countries.

Brazil's president called the levies “a lamentable milestone” in the relationship between the two most populated countries in the Americas.

The U.S. plans to impose a 25% tariff on most imports from Brazil starting next week. A separate U.S. probe into forced-labor enforcement has also proposed an additional 12.5% duty on Brazilian goods that would stack on top of the 25%, with a decision due within days.

The United States accused the country of unfair trade practices. The tariff will replace ones that the Supreme Court struck down.

Brazil's Agriculture Ministry has adjusted export controls for meat and derivatives ​to meet European Union antimicrobial usage requirements, ‌aiming to prevent a suspension of shipments to the bloc starting in September.

I reiterate my buy rating on Brazilian equities, specifically EWZ, FLBR, and Petrobras (PBR), driven by upcoming political catalysts. The Donroe Doctrine's influence in Latin America, with Brazil as the next target, could trigger a significant rally in Brazilian equities.

A Brazilian Senate committee on Wednesday advanced a bill to grant the central bank financial autonomy, boosting its independence in a move opposed by President Luiz ​Inacio Lula da Silva's administration.

U.S Trade Representative Jamieson Greer said that the investigation under Section 301 was launched at the direction of U.S. President Donald Trump.