Impact of Lula on Brazil's Stock Market and Bonds

Despite winning only one out of five regions, with an overall margin of 2%, Luiz Inácio Lula da Silva will become the President of brazil on January 1, 2023. And Interestingly, the first ever to serve three terms (albeit not consecutively).

Replacing the right win Bolsonaro may result in protests and social unrest that could paralyse the country. And reports have today already started emerge. But markets are calm. And investment managers are generally positive on Brazil Equity and Brazil's hard currency and local debt.

Brazil currently has lots of positives. From a governmental and administration perspective, past corruption has resulted in stronger governance. The central bank is independent. Any extreme leftist fiscal policies can be countered by the now right-leaning congress. In fact, inflation is coming down, and the likelihood of rate cuts are more likely in Brazil than in the U.S., Europe, or Asia.

Many initiatives has also been launched on the investment side of the economy. Private Sector Banks are taking more share of the loan book. The all important Petrobras is behaving more like the global listed Oil sector industry - paying large dividends and de-leveraging. And vital infrastructure is receiving the attention is has long needed.