Brazilian Stocks Soar On Election Results

Brazilian stocks soared on Monday following the first round of presidential elections in the country.

What Happened

Far right candidate Jair Bolsonaro scored a decisive victory in the first round of the Brazilian presidential elections, landing 46.7 percent of the vote. His nearest competitor drew just 28.5 percent of the vote.

Why It’s Important

Bolsonaro is running on a platform that’s geared toward improving the economy. Brazil’s economy has been under pressure in recent years, and Brazilian voters appear to think Bolsonaro’s leading contender, Fernando Haddad, would continue the status quo on Brazil. Bolsonaro has said he will prioritize cracking down on corruption, making the Brazilian central bank more independent, and transitioning state-run companies to the private sector.

Former Brazilian President Luiz Inacio Lula is currently serving a 12-year prison sentence for corruption. Under Lula’s leadership, Brazil’s national deficit expanded significantly and the nations pension system became unstable.

On Monday, investors cheered Bolsonaro’s decisive victory:

• iShares MSCI Brazil Index (NYSE: EWZ) was up 6.7 percent.
• Embraer SA (NYSE: ERJ) was up 3.9 percent.
• Petrobras Brasileiro (NYSE: PBR) was up 9.6 percent.
• Itau Unibanco Holding SA ADR (NYSE: ITUB) was up 8.7 percent.
• Telefonica Brasil SA (NYSE: VIV) was up 6.2 percent.
• Gerdau SA ADR (NYSE: GGB) was up 2 percent.
• Braskem SA (NYSE: BAK) was up 3.1 percent.
• Companhia de Saneamento Basico (NYSE: SBS) was up 11.4 percent.
• Banco Bradesco SA (NYSE: BBD) was up 9 percent.
• AMBEV S A/S ADR (NYSE: ABEV) was up 4.8 percent.

What’s Next

Investors can expect continued volatility in Brazilian stocks until the next round of Brazilian elections on Oct. 28. The run-off will pit Bolsonaro and Haddad head-to-head in a run-off.

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