This week, two important meetings are taking place – the BRICS summit in Johannesburg, South Africa (8/22 to 8/24/23) and the annual Jackson Hole Economic Symposium (8/24 to 8/26/23).
The annual Economic Policy Symposium in Jackson Hole, Wyoming, marks the symposium’s 46th year. Each year, international central bankers, including Federal Reserve officials, members from the ECB, BOJ, and other central bankers, meet to discuss global growth and monetary policies. The theme of the meeting this year will be structural shifts in the global economy. Investors will focus on the comments from Fed Chairman Powell on inflation, growth, and the Fed tightening process.
BRICS is an acronym for Brazil, Russia, India, China, and South Africa. Goldman Sachs economist Jim O’Neill coined the term BRIC in 2001 to highlight the four BRIC countries that will become influential in the global economy by 2050.
The 2023 BRICS summit is the fifteenth annual international conference attended by Chinese President Xi Jinping, Brazilian President Luis Inacio Lula da Silva, Indian Prime Minister Narendra Modi, and South African President Cyril Ramaphosa. The Russian President Putin will also attend via conference call. The leaders from BRICS will be locked in discussions over the expansion of the BRICS economic bloc, the de-dollarization of the Dollar, and the feasibility of a new common currency.
China has pushed for BRICS expansion to increase political and economic influence amid rising rivalry with the United States and the West. Twenty-three countries have formally applied to become full-time BRICS members, including Saudi Arabia, Iran, United Emirates, Argentina, Egypt, Ethiopia, Indonesia, and others.
The rise of the BRICS over the last 28 years may become increasingly important to global investors. According to the IMF World Economic Outlook report (as of April 2023), BRICS countries’ share of the global GDP purchasing power parity increased rapidly over the past 28 years as compared to G7 members (Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union). For instance, in 1995, the G7 share of global GDP was 44.9% versus 16.9% for BRICS. By 2010, BRICS had jumped to 26.6% versus 34.3% for G7. In 2013, BRICS edged out G7 with 32.1% versus 29.9%.
Based on the growing clout of BRICS within the global economy, it is reasonable to expect investors to seek out buying opportunities in BRICS over the long term.
The top three (3) BRICS ETFs include iShares MSCI BRIC ETF (BKF), SPDR S&P BRIC 40 ETF (BIK), and Invesco BRIC ETF (EEB).
BRICS country ETFs include iShares MSCI Brazil ETF (EWZ), Russian Trading System (RTS) Index (RTSI), iShares MSCI India ETF (INDA), iShares China Large-Cap ETF (FXI), and iShares MSCI South Africa ETF (EZA).
Enclosed is an RRG analysis on BRICS countries versus SPY over the past eight weeks and 1-year charts of the five BRICS country ETFS. Based on these studies, Brazil (EWZ) and India (INDA) are the relative strength leaders within BRICS, at least from a near-to-intermediate term perspective.
