Petrobras Offering News Could Jolt EWZ

The iShares MSCI Brazil Index EWZ is one of the most popular and volatile emerging markets on the market today. The ETF has a range of over $10 in the past month, during which time it is down more than 4%, but in the past week EWZ is up more than 6%. That's a nice run and there may be some more good news in the near-term for EWZ. Petrobras PBR, Brazil's state-controlled oil company and the largest company by market value in that country, has announced that it has selected six banks to manage a $25 billion secondary share offering. This is bullish for EWZ not only because there was some concern about the offering's ability to move forward in the face of tumbling global stock markets and the European debt crisis, but also because Petrobras preferred and common shares account for more than 19% of EWZ's weight. Beyond that, Banco Bradesco BBD and Itau Unibanco ITUB are among the banks that will manage the offering. Itau accounts for 8.32% of EWZ and Bradesco preferreds account for almost 5% of the ETF. So all almost a third of EWZ is tied to this positive news on the offering and that could be enough to move the needle, if only for a day or two.