Smallcaps (Blue) fell harder than Largecaps (Red), but we are in a new EM bull market as shown by the above 2 yr chart.
BRF is leading EWZ again!
the reasons are many:
- Commodity boom/bust never returns to previous intensity, EWZ’s PBR, VALE, and other large basic material stocks stays out of favor.
- Brazil Smallcaps are more in the consumer industries where there is more likelihood of continued growth, and less likely to be state controlled.
- Smallcaps in general usually lead after a larger fall as liquidity dried up and returns again in a new bull market.