Remember when Brazilian elections used to make investors run for the exits every four years?
Not this time around.
Brazil's stock and currency markets hit fresh highs on Friday in the last trading session prior to Sunday's presidential election, in which center-left ruling party candidate Dilma Rousseff is expected to place first. (For full coverage of the election: [ID:nBRAZIL])
The benchmark Bovespa .BVSP stock index on Friday pushed through the 70,000-points level for the first time since April. [ID:nN01106522]
Meanwhile, Brazil's currency, the real BRBY, traded at about 1.68 per dollar, its highest level since the September 2008 financial crash in the United States. [ID:nN01294099]
The cheery climate is a striking contrast from most previous elections in Brazil. In 2002, deep investor mistrust of Luiz Inacio Lula da Silva, a leftist former metalworkers' union leader, triggered a months-long financial panic that nearly forced Latin America's largest economy into default.
But Lula won that election and ended up proving his skeptics wrong. His responsible fiscal management over the last eight years has helped Brazil become one of the world's top-performing emerging markets.
Polls show that Rousseff, his chosen successor who is promising to lead a similarly pragmatic government, is hovering just around the 50 percent level of support she will need to win in the first round on Sunday. (For a Special Report on Rousseff, click [ID:nN22142128])
Her main opponent, Sao Paulo governor Jose Serra, promises a slightly more centrist, but broadly similar mix of investor-friendly policies with a strong state presence.
The similarities have led most investors to conclude that, no matter the result, there will be no major policy changes that could interrupt Brazil's recent run of growth.
If a runoff vote is necessary, it will take place Oct. 31. |
