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BRIC: Brazil, Russia, India and China — the leading emerging market (EM) economies.
Russia had the largest weight of BRIC countries in the EM energy index before it became uninvestable, as a result of the Ukraine war.
The Chinese index is energy poor and India’s Reliance Industries is much more than an energy company. If investors’ appetite for BRICs was to grow, then Brazil’s Petrobras would be the main beneficiary of lower supply of EM energy equities. In other words, Petrobras does not need to compete with Russian stocks for capital.
Here is Russia’s weight of the emerging market index since the 2008 recession:
As a commodity play, Brazil could regain an additional 4% weight of the index by taking over the flows that would have gone to Russia in an EM bull market.
Since Brazil’s weight is currently 4.87% (as of Mar 31, 2023)1, this would increase Brazil’s total share of EM to 8.87% which is only half of what it was at its peak in June of 08.
Source: MSCI Emerging Markets Index