LULA WIN TRIGGERS BLACK MONDAY SELLOFF IN BRAZIL MARKETS
Brazilian assets are getting crushed after Luiz Inácio Lula da Silva won reelection with 51.8 percent of the vote to Flávio Bolsonaro’s 48.2 percent. Markets had priced in a Bolsonaro victory and a shift toward more investor-friendly policies. They got the opposite.
Premarket trading shows the iShares MSCI Brazil ETF down more than 26 percent. XP Inc. is off over 46 percent. StoneCo, PagSeguro, Itaú, and other major names are down 20 to 35 percent.
São Paulo desks expect circuit breakers when the local market opens. One brokerage projected an 11 percent drop in the Ibovespa in the first hour alone.
The real is under pressure as traders dump positions built on expectations of tighter fiscal discipline. Lula’s track record of higher spending and larger deficits is now the baseline.
Bolsonaro has refused to concede and is seeking to overturn the result, layering political uncertainty on top of the market reaction.
Investors are voting with their money.
Sources:
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