Polling outfits completely bungled the presidential election in Brazil, expecting challenger Luis Inacio Lula de Silva to easily defeat President Jair Bolsonaro by as much as a 20-point margin. Instead, Bolsonaro came with 5 points of Luna who failed to surpass the 50 percent margin needed to avoid a run-off election.
And Bolsonaro receiving an unexpected 43.2 percent of the vote appeared to encourage the Brazilian markets on Monday.
Last Monday, Brazil’s benchmark Bovespa stock index jumped over5 percent while Brazil’s currency rose nearly 5 percent against the US dollar. The country’s bond market rose as well, pushing interest rates down and lowering Brazil’s borrowing costs.
Brazil, which has the largest economy and population in South America, is a powerhouse producer of such commodities as soybeans, iron ore, and petroleum. However, in the run-up to last weekend’s election, Brazil’s status as the world’s fourth-largest democracy has looked increasingly precarious.
The runoff election between Bolsonaro and Lula will be held on October 30.
Currently, the polling has tightened, with Lula leading Bolsonaro by between 3 to 6 points. A recent poll from The Economist had the race tied at 50 percent.
Meanwhile, the two also-rans from last weekend’s race endorsed Lula over Bolsonaro in the upcoming runoff. Whether their voters follow their lead is another matter.
Despite the tightening polls, Lula, the far-left former president of Brazil, is still favored to win on October 30.
Some analysts, however, think Bolsonaro’s far-better-than-expected showing in last weekend’s election may force Lula to moderate some of his opposition to programs pushed by Bolsonaro, including Bolsonaro’s deregulation and privatization programs.
Among the entities earmarked for privatization by Bolsonaro is the Brazilian utility company Electrbras which is currently majority-owned by the government. During last Monday’s stock rally, Electrobras was among the best-performing stocks in the Brazilian markets.