Best of Old Pub: Rio de Janeiro 2016 - A Great Opportunity for Investing

By Strawberry Daiquiri, October 2009 

The 2016 Olympic location has just been announced to be in Rio de Janeiro (Brazil) beating out Chicago, Madrid, and Tokyo. Adding on to the fervor, in 2014 the World Cup will be held in Brazil.What does this mean for the country? A faster and more effective improvement both politically and economically in the next couple of years for the country.

From an economic standpoint, many improvements in the country will cause Brazil’s market to do well, greatly benefiting those who are strongly invested in the country; the tourism, construction, electric, airline, iron ore miner, cement, etc. are all expected to boost the economy. Politically, President Luiz Inacio Lula da Silva, “Lula,” has been very supportive of the games, effectively planning Brazil’s next steps of the planning process and the role it will take in the global economy.

The loss of Chicago was quite a blow to the US; a plan was already drawn up to take advantage of the lovely area near Lake Michigan. Thinking they were going to win, Chicago’s City Council even voted to create an insurance plan that would guarantee any losses, such as empty arenas, from the 2016 Games. No need to worry, however, as Chicago’s symphony orchestra, famous Art Institute, and football team Chicago Bears continue to strongly represent the great city.

When the announcement was made, Brazil’s equity market improved dramatically. How can Americans take advantage of this announcement? 6 letters: EWZ and BRF, the two exchange traded funds tracking Brazil. iShares Brazil (EWZ) rose 23.14% and Market Vectors Brazil Small-Cap ETF (BRF) rose 38.01%. What actually distinguishes the two and which one should you choose? EWZ is the older and larger for the two, investing 95% of assets in the securities of its underlying index and it isn’t diversified. Another Brazil- specific equity funds, BRF may be better for investing in terms of building up for the Olympics since it invests at least 80% of asses in securities that comprise of the Market Vectors Brazil Small-Cap Index.