Stocks & Commodities V. 23:8 (74-75): Intermarket Review by David Penn
THE BRAZIL FUND (BZF)
The Brazil Fund, a closed-end fund traded on the New York Stock Exchange (NYSE), has been in existence since April 1988. The fund includes holdings in such Brazilian companies as WEG Industries, (industrial goods and services), Banco Itau Holding Financeira (banks), and Petroleo Brasileiro (oil, gas, petrochemicals).
After a strong 2003, during which BZF traded above its 10-week moving average for the later three quarters of the year, the fund slipped into a correction that took about 30% off its late 2003 price. That correction lasted six months into the late spring of 2004, when BZF reversed and began moving aggressively higher. Moving above its 20-and 50-week moving averages in the summer of 2004, BZF nearly doubled in value from those late spring/early summer lows as 2004 drew to an end.
What they say: “One problem is that the obvious source of new investment is old investors—and they have
their doubts. Duke Energy, an American company, has
invested 1.5 billion reals ($545m) in Brazil since buying
CESP Paranapanema, a generator on the edge of Sao Paulo state, in 1999. It has been hurt by currency devaluation, by a plunge in demand when rationing was imposed and by quirky regulatory decisions. ‘We have no plans to invest new capital in Brazil,’ said the company’s ‘southern cone’ chief, Mickey Peters, in August. Duke is keeping quiet before the auction.” —From “No Switch-off, Please: Will A Giant Energy Auction In Brazil Lift Investors’ Spirits?” Economist, December 2, 2004.