Rali com Flávio, reação a Lula: o que o buyside espera para segunda-feira

The buyside market still sees potential for a rally in Brazilian assets on Monday if Flávio Bolsonaro wins the election, according to a Citi survey of 73 fund managers. However, market reaction should be more intense and negative if Lula is elected, according to investors surveyed by the bank.

For Flávio as president, 49% of managers believe Ibovespa could rise more than 5% on Monday, while 48% expect a rise between 1% and 5%, and 3% predict a drop of 1% to 5%. In terms of interest rates, 55% project a 50-100 basis point compression in the DI index in January 2029, while 13% anticipate a drop of more than 100 points. Around 78% expect a 2-5% appreciation of the real, while 10% see appreciation of more than 5%. Another 10% expect a stable exchange rate.

"The most surprising result is that the strong asset appreciation after the first round did not reduce expectations for further gains," says the report signed by Citi's head of research for Latin America, André Mazini. "This suggests that the post-first-round appreciation is seen as a stage of re-pricing, not its conclusion."

If Lula is elected, managers expect a "substantially more aggressive" reaction in prices, according to Citi. In relation to the stock market, 80% anticipate a drop of over 5% in Ibovespa on Monday, while 7% project a decline between 1% and 5% and 3% believe the index could rise 1% to 5%. Other 63% expect a depreciation of the real above 5%, while 28% believe it should fall between 2% and 5%.

6% believe the real will appreciate more than 5%. For interest rates, 67% anticipate an opening above 100 basis points in the DI index of January 2029. For 14%, the rise should be between 50 and 100 points, and 13% of managers see a rise of 10-50 points. "Investors continue to consider the fiscal trajectory as the main determinant of Brazilian asset prices," says Citi.