The sharp declines have also been fueled by uncertainty over the US-China trade talks on a macro level. The combination of these two forces, the external macro headwinds and weak domestic economy, have both been a perfect storm for the under-performance of Brazilian stocks in 2019 thus far. Furthermore, on a technical basis, the EWZ continues to show deterioration within the equity market, with the 50-day acting as a strong resistance March 2019 and the price action failing to break above since then.
We believe that is these headwinds continue, there will be more downside for Brazilian stocks to come. We caution investors against this equity market.