Luiz Inácio Lula da Silva has done it again. In Sunday's runoff, Brazil's president-elect beat Senator Flávio Bolsonaro by roughly 51.8% to 48.2%, a gap of about 4.4 million votes, with turnout around 81%. That's a real comeback. Bolsonaro had led the first round 47% to 45%, and PBS notes it's the first time since 1985 that the first-round runner-up has gone on to win. Lula, who's about to turn 81, would begin a fourth, non-consecutive term on January 5, 2027.
It wasn't a clean finish. A Supreme Court justice extended voting by two hours, at the request of both campaigns, after bus problems in São Paulo and Salvador and heavy rain in the south. Bolsonaro allies quickly pointed out that the justice, Cristiano Zanin, used to be Lula's lawyer. Flávio Bolsonaro has refused to concede, and Donald Trump said, without evidence, that it looked like a rigged election. Bolsonaro's own Liberal Party, though, has accepted the result.
Then came Monday, and investors had a terrible day. Many had bet on a Bolsonaro win and the business-friendly reforms they expected with it. According to Yahoo Finance, Nu Holdings fell about 25% in morning trading, Petrobras about 21%, MercadoLibre around 15%, and the big iShares Brazil ETF dropped 28%. TheStreet reported XP Inc. is down about 50%. Worries include higher taxes, tougher rules for banks and lenders, government meddling at Petrobras, fuel price controls, and a slow plan to fix Brazil's public finances.
Lula's supporters see a win against rising U.S. influence in Latin America. Investors see risk. Both things can be true at once.
