Far right candidate Bolsonaro wins resolutely in the first round of the presidential elections in Brazil. Markets are rallying as expectations are that pro-business reforms will come and more privatization of Brazilian companies.
The Brazilian Markets extended its rally today with EWZ up more than 7% as the far-right candidate in the Presidential election Jair Bolsonaro took a decisive win in the first round of presidential elections. Bolsonaro got 46% of the votes compared to only 26% for left wing candidate Fernando Haddad. They will now meet in the 2nd runoff vote on the 28th of October.
The market found the large lead a clear indication that Bolsonaro most likely will win the presidency. Yahoo Finance quotes UBS Wealth Management
“Bolsonaro’s showing was stronger than expected, and although the market has been moving in recent days to price in momentum in his favor, today’s results should provide additional support to Brazilian assets. I don’t think the strength of his showing today was fully priced in”
In addition, Bolsonaro allies in the Brazilian congress which will help push through his agenda. As mentioned earlier here, Bolsonaro have promised lower taxes and privatization of Brazilian companies. Petrobras (PBR US), and Cemig (CMIG4 BZ) both have governmental influence and could potentially benefit from all this. Furthermore Brazilian banks and utilities will benefit from less strict government interventionist policy.