The 'Brazil Trade' Is Back - Why Analysts See More Upside Ahead

Brazilian equities are roaring back to life in early 2026, riding a powerful mix of surging commodity prices, a weakening U.S. dollar and a broad rotation into emerging markets

The iShares MSCI Brazil ETF (NYSE:EWZ) is up roughly 20% month-to-date, sharply outperforming the SPDR S&P 500 ETF Trust (NYSE:SPY), which has gained just under 3% over the same period.

That 17-percentage-point gap marks EWZ's strongest one-month outperformance versus U.S. equities in more than four years.

According to CountryETFTracker data, EWZ currently ranks as the third best performing U.S.‑listed country ETF over the past month, trailing only the iShares MSCI Peru and Global Exposure ETF (NYSE:EPU), which is up 26%, and the iShares MSCI South Korea ETF (NYSE:EWY).

The EWZ/SPY relative spread has now broken above its longer‑term downtrend, signaling a potential technical breakout that could draw more money into Brazilian equities after decades of underperformance.

Notably, during the last major commodity supercycle—from October 2002 to May 2008—Brazilian equities outpaced the S&P 500 by over 1,000%, underscoring their historical leverage to resource-driven bull markets.

Why Experts Think Brazilian Equities Have Further To Run

On Tuesday, Brazilian macro analyst Otavio Tavi Costa, CEO at Azuria Capital, wrote in a post on X:

“Brazil's largest energy company – Petroleo Brasileiro SA Sponsored ADR (NYSE:PBR) – is on the verge of a major breakout. If you don't see the connection to the recent breakdown in the US dollar, I can't help you. Game on.”

According to Costa, Brazil's market breakout is part of a much larger shift underway in global markets.

Last week, the expert highlighted that that Brazilian equities are breaking above long-term historical resistance, a move many investors still see as isolated

In his view, that interpretation misses the bigger picture: resource-rich emerging markets have historically moved in lockstep with commodity cycles.

If the current surge in hard assets marks the early stages of a broader rotation,

Costa says economies like Brazil stand to benefit disproportionately — potentially signaling the start of a longer-term structural trend rather than a short-lived trade.

Analysts Highlight Brazil's Cyclical Strength

Analysts at 22V Research, including Jordi Visser, head of AI Macro Nexus Research, and derivatives specialist Jeff Jacobson, are also bullish on Brazil's prospects.

In a note shared earlier this week, 22V Research said it prefers emerging markets such as Brazil and the broad‑based emerging‑market ETF (EEM) to play what it calls the "broadening out" theme, driven primarily by commodities and materials sectors.

The research group also highlights the continued U.S. dollar weakness as a catalyst that should help these markets outperform.

A weaker dollar tends to benefit commodities and emerging‑market assets priced in dollars, as it raises local currency returns for foreign investors.

Visser argues there is still considerable upside in EWZ despite its recent run. He notes that Brazil's sector composition aligns well with his favored themes.

"If you look at EWZ's composition, you're getting exposure to exactly the sectors we're most bullish on — materials, energy and, to a degree, banks," Visser said.

That positioning has helped EWZ lag global markets for years — but now appears to be working in its favor as capital rotates into non-tech, real-asset-linked trades.

Visser also noted that Brazil has been structurally underowned and underperforming for an extended period, a setup that can fuel powerful momentum once flows reverse.

"We're starting to see the money gravitate toward it," he said.

"And when that happens — as we've seen in other trades like silver — buying tends to beget more buying."

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