Brazil: Electoral outcome remains largely undefined – Standard Chartered

According to analysts at Standard Chartered, Brazil’s electoral season is approaching a defining moment and during the next few weeks parties will hold national conventions to determine presidential candidates for the first round of elections on 7 October.

Key Quotes

“Currently the number of ‘pre-candidates’ is 18, but this will shrink in the coming weeks as some drop out or endorse other candidates. These pre-candidates comprise three different categories:

• Reformists: Willing to push a reform agenda and have the required political capital to build a broad coalition within Congress. Local markets see Geraldo Alckmin (of the PSDB) as the main representative within this group.
• Quasi-reformists: Seen as hesitant to push a liberal reform agenda or will likely face problems finding congressional support. Marina Silva (REDE) is one example, Jair Bolsonaro (PSL) another.
• Counter-reformists: Intend to revise the legislation that has already been implemented. Most left-wing candidates are within this group, particularly Ciro Gomes (PDT).”

“Alckmin is perceived as the most positive outcome for markets, but his weak polling numbers to date (stuck below 10% in national surveys) leave investor anxiety high. Compared with earlier this year, Alckmin has lost ground in his home state of São Paulo (SP) to Bolsonaro, the right-wing alternative. However, we still see factors between now and the October elections that suggest it is too early to rule out Alckmin.”