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Brazil woke up today not only to a new political reality, with two presidential candidates heading into a second round in which Flávio Bolsonaro has the advantage, but also to a rise on the stock exchange.
With Flávio Bolsonaro’s strong showing in Sunday’s vote, taking 47% of ballots cast, the Ibovespa index (IBOV), the main benchmark for shares traded on Brazil’s leading stock exchange (B3), recorded an 8% jump. On Friday it had also closed higher, up 2.46%.
According to some specialists, the rally is linked to the unexpectedly wide lead secured by the son of former president Jair Bolsonaro, which increases the chances of a victory seen as ushering in a new fiscal and economic outlook for the country.
Flávio Bolsonaro’s platform includes scrapping taxes, measures to rein in public debt and the privatisation of dozens of state-owned companies.
Analysts at BTG Pactual, Latin America’s largest investment bank, estimate that a Flávio Bolsonaro victory on 25 October could push B3’s shares up by as much as 45%.
The Brazilian real also strengthened over the course of the day, trading at 4.98 reais to the dollar, compared with 5.22 at Friday’s close.
Although inflation has been brought under control and unemployment has fallen to a historic low during Lula da Silva’s third term, Brazilians complain of a loss of purchasing power.
Flávio Bolsonaro, of the far-right Liberal Party, won more than 56 million votes (47.03%), while the left-wing candidate Luiz Inácio Lula da Silva secured the backing of almost 53.9 million voters (45.16%).
Additional sources • AFP