Brazilian markets plunged Monday after President Luiz Inácio Lula da Silva clinched a reelection victory, as investors scrambled to reconfigure their bets on right-wing challenger Flávio Bolsonaro.
“Everyone was caught by surprise,” an analyst told Bloomberg. “The market will reprice everything.” The result derailed some $6 billion in corporate equity sales lined up post-election.
Brazilian stocks had surged after Bolsonaro’s first-round win, as he pledged to trim deficit spending. Both candidates, however, closed out the campaign’s final hours promising expensive new subsidies, highlighting the political difficulties of reining in public debt, which has increased under Lula by 10 percentage points to more than 82% of GDP. Bolsonaro has challenged the election result, further pressuring Brazil’s real.
