Collapse of the BRIC Trade

With the Brazilian real having its first monthly decline against the U.S. dollar since November, and BRIC (Brazil/Russia/India/China) markets all having a bad run — the Shanghai Composite is off 34% this year — I thought it timely to take a look at how the BRIC trade has been doing. Assuming you were long an equal-weighted portolio of the BRICs, and short the U.S. markets, here is how the two sides of the trade have done since 1/1/2006.


It is, to use the technical terms, doing horribly. The bottom fell out of the trade in early February, with the spread between the two indices converging, and now the BRIC countries’ market performance have passed the U.S. on their way lower. Commodity currency countries are not a fun place to be right now.