Morten Lund, Research Analyst at Nordea Markets, explains that Bolsonaro dominated Sunday’s election of Brazil with better than expected results in the presidential and parliamentary elections.
Key Quotes
“As widely expected, the two beforehand favourites, Jair Bolsonaro (Social Liberal Party) and Fernando Haddad (Workers’ Party) made it through to the second run-off in the presidential election as none of them secured more than the 50% needed to get elected in the first round. The two candidates now will face each other in the second round 28 October.”
“There was, however, some surprises in Sunday’s election. The far-right, controversial candidate, Bolsonaro, ended up with around 46% of the votes – well above what opinion polls had suggested. Leftist Haddad also received more votes than anticipated, but the 29.1% he received was closer to what the polls had indicated.”
“On top of this, Bolsonaro’s Social Liberal Party had a better than expected election in Congress, as the party according to projections will receive around 51 of the 513 seats in the lower house.”
“Based on Bolsonaro’s domination in Sundays’ election, he looks like a clear favourite in the second run-off. According to betting markets, the odds of Bolsonaro getting elected on the 28 October has increased to around 75%.”
“We expect the BRL to rally when markets open as Bolsonaro is considered to be the lesser evil of the two candidates by the financial markets.”
“Although, the more market-friendly Bolsonaro looks like a winner, we still see limited upside for the BRL in the coming years.”
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