Brazil markets set to rally as Bolsonaro leads in first-round vote
EWZ•Analysts expect Brazilian stocks, bonds and the real to rally after Flavio Bolsonaro won 47% of the first-round vote, ahead of Luiz Inacio Lula da Silva at about 45%. The overseas-traded MSCI Brazil ETF rose more than 14%.
1. Bolsonaro leads first round
Flavio Bolsonaro won 47% of the votes cast in Brazil’s presidential election first round, beating private poll predictions and setting up a runoff this month against President Luiz Inacio Lula da Silva, who secured about 45%. Polls had forecast Lula would lead by around three percentage points.
2. Markets poised to rally
Analysts expect Brazilian stocks, bonds and the currency to strengthen when markets open Monday. The Frankfurt-listed MSCI Brazil ETF jumped more than 14% in overseas trading, while overseas-listed shares of Brazilian companies including Itau Unibanco and Petrobras gained. One analyst forecast equities could rise 4% to 6% and the dollar could fall 2% to 4%.
3. Campaign and market expectations
Bolsonaro has promoted a pro-market agenda including tighter public spending, privatizations and lower taxes. Analysts said markets may give him the benefit of the doubt, while looking for clear signals that he intends to address the country’s problems.
