Brazilian stock market plunges after Lula da Silva wins presidential election
The real fell 11% against the US dollar
The Ibovespa index, the main indicator of Brazil’s stock market, fell 17.3% at its lowest point. This was the market’s sharpest drop since the beginning of the coronavirus pandemic, Bloomberg notes.
Shares of companies operating in Brazil fell on US and European exchanges. The share price of brokerage firm XP fell 52%, while that of banking group Itau Unibanco Holding fell 25%.
President Luiz Inácio Lula da Silva won the second round of the election, while his opponent, Flávio Bolsonaro, had previously been considered the preferred candidate for investors. Market participants fear that Lula da Silva will be unable to solve the budget deficit problem: during his previous term, he stimulated consumption and expanded lending but did almost nothing to reduce the deficit.
