South Korean funds investing in Brazilian stocks and resources have posted stellar returns this year on higher raw materials prices and a recovery in the Brazilian economy, a fund evaluation firm said Friday.

According to Zeroin, this year's cumulative return of local Brazil-related investment funds with net assets of 1 billion won ($890,000) or more stood at a whopping 60.5 percent as of Wednesday, far outshining other overseas funds.


Overseas equity funds came next with a cumulative yield of 36.7 percent, trailed by funds investing in stocks of emerging South American economies with 34.3 percent.

The outstanding performance of the Brazil-oriented funds was attributed to a combination of rising commodity prices, a surge in Brazil's benchmark stock index and Brazil's efforts to revive its struggling economy.

Spot prices of West Texas Intermediate crude have soared 24.1 percent this year, with gold prices jumping 20.1 percent and Brazil's key stock index spiking 47.1 percent, according to Zeroin.

Following the successful hosting of the 2016 Summer Olympics, Brazil is ramping up efforts to revive the largest economy in Latin America.

Brazil's central bank cut its benchmark interest rate by a quarter percentage point to 14 percent on Wednesday, the first rate reduction in four years. Market watchers forecast Brazil to continue its monetary easing and lower the key rate as low as 11.5 percent by the end of 2017.

The Brazilian economy plunged into its worst recession in 2014, hit by plunging prices of iron ore and other resources and political uncertainty stemming from former President Dilma Rousseff's suspected corruption.

Experts said Brazil's economy is showing signs of a recovery, backed by the impeachment of Rousseff and an assessment that the country has successfully hosted the Rio de Janeiro Olympics, which ended on Aug. 21. Brazil's central bank has said the country will return to positive economic growth in 2017 from this year's contraction.

Shin Hwan-jong, an analyst at NH Investment & Securities Co., said there are many positive leads such as a trend of recovering macroeconomic stability and Brazil's push for market-friendly policies, despite the presence of negative externalities like a correction in resources prices, a possible US rate hike and the volatility of the Brazilian currency. (Yonhap)