Analyst says any sharp sell-off in Brazil after Lula win could be a buying opportunity

Gavekal Research analyst Rohan Daswani said investors should consider buying a potential sell-off in Brazilian markets after Luiz Inacio Lula da Silva’s unexpected victory over Jair Bolsonaro. He said the market had already priced in expectations of a Bolsonaro win and tighter fiscal discipline, which could now unwind as those positions are closed. In his view, that does not change the broader case for Brazil. Daswani said the structural reasons for staying constructive on the country remain in place. He pointed to unusually high nominal and real interest rates, Brazil’s large exposure to commodities, and its growing importance in critical mineral supply chains. He also argued that Brazil’s Congress is materially more conservative than the president, a factor he said limits the room for a major leftward shift in economic policy. According to the report, Brazil’s stock market opens at 21:00 Beijing time.