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:

  1. Commodity boom/bust never returns to previous intensity, EWZ’s  PBR, VALE, and other large basic material stocks stays out of favor.
  2. Brazil Smallcaps are more in the consumer industries where there is more likelihood of continued growth, and less likely to be state controlled.
  3. Smallcaps in general usually lead after a larger fall as liquidity dried up and returns again in a new bull market.