Brazilian assets lead LatAm advances after Bolsonaro surprise
EWZ•Latin American markets advanced, led by Brazil after Flavio Bolsonaro outperformed private poll predictions and took the lead in the presidential election’s first round. Brazil’s Bovespa rose nearly 9% to a record high, while the real gained more than 5%.
1. Brazil leads gains
Latin American markets advanced on Monday, with Brazilian assets leading after right-wing senator Flavio Bolsonaro outperformed private poll predictions and took the lead in the first round of presidential elections over the weekend. The Bovespa jumped nearly 9% to a record high; Petrobras rose 6% and BTG Pactual gained 18.8%.
2. Real and bonds rise
The real rose more than 5% to around 5 per dollar, while Brazilian hard-currency bonds with maturities in 2033, 2036 and 2056 each gained more than 1 cent on the dollar. Both candidates face a runoff on October 25. Investment director Viktor Szabó said market expectations of fiscal reform and stronger primary balances must be backed by credible proposals.
3. Regional market moves
MSCI’s regional equities index advanced 8.1%, while its currencies gauge rose 3.2%. The article also cited lower expectations of a Federal Reserve rate hike following weaker-than-expected U.S. data, higher metal prices, a $6 billion Colombian local-bond swap, and IMF approval of a roughly $1.9 billion loan program for Bolivia.
