Brazilian stocks showed slight signs of recovery in extended hours trade Friday, hours after a new wave of political turmoil saw major indices post their worst day since the start of the 2008 global financial crisis.
The iShares MSCI Brazil Capped ETF (EWZ), a heavily traded U.S. exchange-traded fund that tracks Brazilian stocks, was up more than 4 percent Friday morning after plummeting 18 percent Thursday, a depreciation not seen since October 2008.
The ETF ultimately closed the day down 16.33 percent amid allegations that Brazilian President Michel Temer agreed to pay hush money to a witness in the country’s biggest-ever corruption probe.
Meanwhile, the iShares MSCI Emerging Markets ETF (EEM), which features a 7.65 percent exposure to Brazil, was seen higher by more than 1.3 percent Friday after closing the previous day down 1.66 percent.
The uptick will provide slight relief to investors, who continue to battle against a tide of volatility within the embattled economy.
However, turmoil is par for the course in emerging markets.
The Brazil Bovespa index, which also logged its worst day since October 2008, fell 10 percent in Thursday trading and has suffered a tumultuous journey before now. Nevertheless, the Brazilian stock exchange has been on a largely upwards trajectory since early 2016 and is up almost 20 percent over the past decade.
So, just how concerned should investors be by the latest development to shake the Latin American powerhouse?