Brazilian stocks rose sharply on Monday after far-right presidential candidate Jair Bolsonaro left his opponents in the dust in the first round of voting.
The iShares MSCI Brazil exchange-traded fund (EWZ) jumped 6.5 percent in the premarket.
Bolsonaro garnered 46.7 percent of the votes in Sunday’s first round, much more than any other candidate. Former Sao Paulo Mayor Fernando Haddad came in second with 28.5 percent of the overall vote.
Polls leading up to Sunday’s vote predicted a Bolsonaro victory, but the former army captain far outperformed those forecasts. A second voting round will be held Oct. 28 because no candidate received more than 50 percent of the votes.
Larry McDonald, head of the U.S. macro strategies at ACG Analytics and editor of The Bear Traps Report, said in a note Sunday the polls leading up to the first round were “discounting” the conservative vote in Brazil. “There’s an invisible tailwind behind this former General.”
Investors have recently cheered Bolsonaro’s because they favor his economic platform. Bolsonaro has also promised to take a tough stance against corruption. Meanwhile, investors fear a Haddad victory would maintain the types of policies that that have pressured Brazil’s economy.
Haddad became the Workers Party candidate after a court banned former President Luiz Inacio Lula da Silva from running again. Da Silva, better known as Lula, is serving a 12-year sentence for corruption. Lula’s government — along with that of Dilma Rousseff, his successor — led to a ballooning fiscal deficit and contributed to an unsustainable pension system.
Brazilian stocks rose sharply last week in the lead-up to Sunday’s vote. EWZ surged 8.7 percent while the Bovespa index gained 3.8 percent.
