سقوط نزدیک به ۱۵ درصدی ETF برزیل در توکیو پس از پیروزی دور دوم لولا

The Tokyo ETF move is an early and thin-volume signal, so the real test comes when Brazilian markets open, with the real, the local rates curve and the Bovespa likely to bear the brunt of any repricing. Goldman Sachs’ figures describe an extreme scenario rather than a base case, but they frame the scale of the potential move, with the long end of the curve and the currency most exposed. Positioning matters: markets rallied after the first round on expectations of a different outcome, so some of the selling may reflect that trade being unwound rather than a fresh view on policy. Spillover to other Latin American currencies and EM risk sentiment is possible if the selloff is disorderly, while a contained reaction could see dip-buyers emerge quickly.

Lula pulled off a rare second-round comeback, and the first verdict from markets, a near 15% drop in a Tokyo-listed Brazil ETF, suggests investors had been positioned for the other result.

Lula won Brazil’s presidential runoff on Sunday against Senator Flavio Bolsonaro, securing a fourth non-consecutive term with about 52% to 48% and a margin of more than 4 million votes, with nearly all ballots counted

He trailed in the October 4 first round, making him the first candidate since 1989 to lose round one and win the presidency

A Tokyo-listed ETF tracking the Bovespa fell nearly 15% in Asian trade on the result

Goldman Sachs said an extreme scenario could see USD/BRL rise 10%, long-term government bond yields climb about 200bp, credit spreads widen 30 to 40bp and equities fall about 15%

Brazilian assets face a sharp repricing after President Luiz Inacio Lula da Silva won Sunday’s runoff election, with an early read from Asian trading pointing to heavy selling when local markets open.

Lula defeated right-wing Senator Flavio Bolsonaro by about 52% to 48%, a margin of more than 4 million votes with nearly all ballots counted, securing a fourth non-consecutive term. The result marked a comeback: Lula trailed in the first round on October 4, making him the first candidate since 1989 to lose the opening round and go on to win the presidency.

The initial market response was stark. A Tokyo-listed exchange-traded fund tracking Brazil’s Bovespa index fell nearly 15% in Asian trade on news of the victory, according to Reuters. While trading in such offshore vehicles can be thin, the move offers an early indication of how investors may react across Brazilian assets.

Goldman Sachs set out what an extreme scenario could look like on Monday. The bank said the dollar could rise as much as 10% against the real, long-term government bond yields could climb by about 200 basis points, credit spreads could widen by 30 to 40 basis points and Brazilian equities could fall around 15%. Goldman framed these as an extreme case rather than its central expectation, but the figures underline the scale of the repricing risk.

Part of the pressure reflects positioning. Brazilian markets rallied after the first round, when Bolsonaro finished ahead, as investors priced in a higher chance of his victory. Sunday’s result reverses that assumption, leaving those trades exposed.

Attention now turns to the opening of Brazilian markets, where the real, local interest rate futures and the Bovespa will show whether the selling matches the scale signalled in Tokyo or proves more contained. Investors will also watch for early signals from Lula’s camp on economic and fiscal policy for the new term, which could help determine whether the initial reaction extends or stabilises.

This article was written by Eamonn Sheridan at investinglive.com.