Domestic assets should react positively to the outcome of the fiercerthanexpected first round between Lula and Bolsonaro (Image: Portal/Amanda Perobelli)
The dispute in second round between the President Jair Bolsonaro (PL) and the former President Luiz Inacio Lula da Silva (EN) comes as no surprise to the market. Much less the difference in votes between them, with Lula leading with 47.9% of valid votes and Bolsonaro with 43.6%. By 9:35 p.m. (Brasília time), 97.25% of the polls had been counted.
Analysts comment that, not surprisingly, the domestic assets should react positively the result of the first round.
Partner analyst at Ajax Asset, Rafael Passos, assesses the index’s performance Ibovespa and actions, mainly stateowned such as Petrobras is rather positive.
in relation to dollar and to future interest, he believes that external factors can influence the behavior of these assets. However, they can also show a positive performance when reacting to the “very violent” outcome, he says.
RB Investimentos strategist Gustavo Cruz believes Lula and Bolsonaro need to win voters they don’t own in the second round. “In this case, it’s the middle voter, and the two need to soften the speeches to win over that constituency,” he says.
Lula had more than 55.2 million votes, while just over 50.3 million voters chose Bolsonaro, who led alongside the federal district in 13 states.
Veedha Investimentos chief economist Camila Abdelmalack adds that the Volatility should gain strength in the coming weeks amid the heated dispute between the current and former presidents.
“Candidates will be more exposed to economic problems and the market will be very attentive to the names that can form their teams,” he comments.
Ajax’s Passos says that for the time being it is possible to shape a Congress, both the Chamber of Deputies and the Senate, more inclined towards liberal agendas, which supports the idea that domestic assets can react positively to the second postponement tomorrow.
“Also, the market didn’t work with the difference that the election polls showed, some as much as 10 percentage points. So no surprises in this heavier second round,” comments the partner analyst at Ajax Asset, adding that the Senate is undergoing a major refurbishment.
Dan Kawa, CIO of TAG Investimentos, warns that the victory of several rightwing and centerright candidates reduces the risk that an eventual Lula government will be overly leftleaning, given the huge opposition they will face. “I expect a positive reaction from local assets,” he affirms.
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