BRICS vs. Protectionism: Navigating De-Dollarization and Emerging Market Opportunities

The 2024 BRICS summit in Kazan, Russia, marked a pivotal moment in global economic diplomacy. The inclusion of four new members—Egypt, Ethiopia, Iran, and the UAE—alongside the adoption of the Kazan Declaration, signaled a bold stance against Western protectionism and unilateral sanctions. This shift toward economic sovereignty and multilateral cooperation has profound implications for investors, particularly in emerging markets. Here's how to position portfolios to capitalize on these trends.

The De-Dollarization Trend: A Currency Play for the Ages

BRICS's push to reduce reliance on the U.S. dollar is gaining momentum. Initiatives like BRICS Pay—a SWIFT alternative—and BRICS Clear, an independent settlement infrastructure, aim to streamline cross-border transactions in local currencies. This reduces exposure to U.S. sanctions and volatility tied to the dollar.

For investors, this opens opportunities in BRICS currencies such as the Russian ruble (RUB) and Brazilian real (BRL). Both currencies have shown resilience amid geopolitical tensions, with RUB appreciating 12% against the dollar in 2024 due to energy export revenues.

Boosting Intra-BRICS Trade: Sectors to Watch

The Kazan Declaration emphasized boosting intra-BRICS trade through platforms like the BRICS Grain Exchange, which could elevate agricultural exports from Brazil, Ukraine (via partnerships), and Russia. Meanwhile, tech and manufacturing sectors stand to benefit from reduced reliance on Western supply chains.

• Commodities: Brazil's Vale (VALE), a global iron ore leader, gains as infrastructure projects in India and China accelerate.
• Tech: India's Tata Consultancy Services (TCS) and China's Huawei (indirect exposure via proxies like ZTE (ZTE)) could thrive as intra-BRICS digital infrastructure grows.
• Manufacturing: Russia's AvtoVAZ (Lada) and India's Mahindra & Mahindra may see demand rise for locally produced machinery and vehicles.

Equity Plays: Focus on Export-Driven Sectors

Investors should prioritize companies with strong export profiles and exposure to BRICS trade corridors:
1. Agriculture & Commodities: Brazil's JBS (JBS) (meat exports) and Petrobras (PBR) (energy).
2. Technology & Infrastructure: China's China Mobile (CHL) (5G expansion) and Infosys (INFY) (Indian IT services).
3. Manufacturing & Autos: Russia's Kamaz (heavy vehicles) and South Africa's Anglo American (AGL) (mining).

Risks to Consider

Geopolitical tensions—particularly over Ukraine—remain a wildcard. Western sanctions could disrupt trade flows, while economic slowdowns in member countries pose execution risks. However, the long-term structural shift toward a multipolar economy favors BRICS-aligned investments.

Conclusion: Positioning for a New Economic Order

BRICS's rejection of coercive tariffs and push for de-dollarization are reshaping global trade. Investors ignoring these trends risk missing out on growth opportunities in currencies, commodities, and tech. While geopolitical risks linger, the structural shift toward intra-BRICS collaboration creates a compelling case for gradual exposure to emerging markets.

Recommendation:
- Long positions in RUB, BRL, and CNY (via ETFs like CNY ETF (CYB)).
- Equity allocations to VALE, TCS, and INFY, with a focus on diversification across sectors.
- Monitor sanctions risks and geopolitical developments closely, but stay patient—this is a multi-year theme.

The BRICS bloc is no longer just a group of rising economies; it's a counterweight to Western dominance. Investors who adapt now will be poised to profit from the next phase of global economic realignment.