By Nelson Belen, Contributing Reporter
RIO DE JANEIRO, BRAZIL – As Brazil’s divisive 2018 election draws near, the country’s financial markets surged on Tuesday, October 2nd, on the back of reports that support for controversial right-wing presidential candidate Jair Bolsonaro is rising according to the latest opinion poll.
Brazil’s benchmark Bovespa stock market (IBOVESPA) gained 3.78 percent on Tuesday, its biggest one-day gain since November 7th, 2016, when it jumped 3.98 percent.
In addition, the iShares MSCI Brazil Capped exchange-traded fund (ETF), an American ETF that invests in mid and large cap companies in Brazil representing 85 percent of the Brazilian stock market, surged 5.64 percent on Tuesday, the fund’s best day since January 24th, when it gained 6.2 percent.
Tuesday’s rally in the Brazilian markets came after a new Ibope poll published earlier that day showed that Bolsonaro had lengthened his lead over his opponents with the election less than a week away.
According to the poll, Bolsonaro led all candidates with 32 percent of intended votes. He was followed by Fernando Haddad (PT), the left-wing handpicked successor of imprisoned ex-president Luiz Inácio Lula da Silva (Lula), who garnered 21 percent of voter intentions.
Former minister Ciro Gomes (PDT) and ex-São Paulo governor Geraldo Alckmin (PSDB) were a distant third and fourth with eleven percent and nine percent of intended votes respectively.
In the event of a likely second-round runoff between Bolsonaro and Haddad, both were tied with 42 percent of intended votes. In last week’s poll, Haddad had led Bolsonaro 42 percent to 38 percent in a runoff scenario.
“This is clearly favorable for Bolsonaro and markets have reacted positively,” explained Alberto Ramos, head of Latin American Economics at Goldman Sachs, to reporters on Tuesday.
Ramos suggested that Bolsonaro is perceived as the more market-friendly candidate as compared to Haddad.
“[T]he fear is that Haddad and the Workers Party will return to power and to the policies that took so many years to digest,” he said.
The first round of voting in the Brazilian presidential election will take place on Sunday, October 7th. If no candidate wins more than fifty percent of the vote, there will be a second-round runoff on Sunday, October 28th.