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The impact on the stock market and the dollar with the victory of Lula or Bolsonaro

The impact on the stock market and the dollar with the victory of Lula or Bolsonaro
The impact on the stock market and the dollar with the victory of Lula or Bolsonaro

A survey carried out by the brokerage BGC Liquidez with 212 institutional managers operating in Brazil mapped the impact on the stock market and on the country’s main assets in the event of Lula or Bolsonaro’s victory.

The result shows that there is a preference in the market for Bolsonaro, but a Lula government would not provoke major negative reactions on the Ibovespa and the dollar.

In large part, because this is the scenario pointed out as the most likely for 80% of managers. It would therefore already be “in the price”, as economists say. At Petrobras, however, the losses would be greater because the PT candidate has been talking about controlling fuel prices.

purse and dollar

The research reveals that, in the event of Lula’s victory in the first round, the Ibovespa index would fall by 3% in the days following the result.

If the PT took the second, he would be stable. According to BGC’s chief economist, Juliano Ferreira, the end of the election next Sunday would leave Lula with higher political capital, which could induce more public spending.

In the event of Bolsonaro’s victory in the first round, the Ibovespa would rise 8%, with a rise of 5% if it won in the second.

“The market understands that Bolsonaro has a greater alignment with the liberal agenda of Paulo Guedes. So any change he wants to make, in the sense of spending more, would be to a lesser degree and at a slower pace than in the case of Lula’s victory. This explains the different reactions of the Ibovespa”, he explained.

Looking at the exchange rate, Lula’s victory in the first round would lead to a 2% increase in the dollar. In the second, it would have no effect. In the event of Bolsonaro’s victory in the first round, the dollar would fall by 3%, and, in the second, it would fall by 2%.

Petrobras loses with PT victory

BGC asked about the impact on four companies: Petrobras, Banco do Brasil, Eletrobras and Magazine Luiza.

The biggest discrepancy in the results is in Petrobras’ actions.

As Lula has been talking about changing the company’s fuel pricing policy, a PT victory in the first round could lead to an 8% drop in shares.

Winning in the second, the drop would be 2%.

In case of Bolsonaro’s victory in the first round, Petrobras would rise 10%, with a rise of 5% if it took the second.

With the other companies, including Eletrobras, which lost control of the Union, volatility would be lower, but always positive if the PL candidate wins.

Lula’s victory is more likely

The probability of Lula’s victory in the first round is pointed out by 20% of the managers. He won in the second, by 60%.

This is the most likely scenario for 80% of managers. Bolsonaro’s re-election in the first round would have virtually zero probability, below 3%, with a 17% chance of winning in the second.

“The numbers show that the base scenario is for Lula to win. The big question is who will be the Minister of Economy and which way he should go. What is priced in is something mixed, a leftist politician with more liberal technicians. There is room for surprises, up and down,” he explained.

Of the 212 respondents, 29% did not respond about who they thought would be the minister. And 16% bet on Henrique Meirelles, against 8% on Alexandre Padilha and Fernando Haddad.

Today, the name of Lula’s ex-president of the Central Bank has returned to the market, but in the PT the information is that “only Lula” knows who he could appoint.

uncertain international scenario

It should be noted that the international scenario is extremely cautious, due to the increase in interest rates in the US, the fiscal package from England that was poorly received by the market, the war in Ukraine and the slowdown in China.

In other words, there are plenty of reasons for bad results on the stock market, if Lula settles the bill next Sunday.

By Alvaro Gribel

With content from the digital newspaper The globe

Selected articles from the newspaper O Globo, partner of Financial Intelligence

The article is in Portuguese

Tags: impact stock market dollar victory Lula Bolsonaro

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