Brazil Stocks Could Fall 30%, Morgan Stanley
Morgan Stanley says Brazil’s stocks could drop 20% to 30% and the dollar reach 5.70 reais if fiscal worries grow after Lula’s win. The post Brazil Stocks Could Fall 30%, Morgan Stanley appeared first on The Rio Times .
Morgan Stanley warns Brazilian stocks could plummet 20% to 30% if concerns over government spending escalate further. The Ibovespa, Brazil's main stock index, fell roughly 14.7% as of 2:46 p.m. ET on Monday, nearing 175,000 points. The dollar rose to 5.60 reais before settling around 5.41 by 3 p.m. ET. Lula secured 51.8% of valid votes in Sunday's runoff, defeating Flávio Bolsonaro, the son of former President Jair Bolsonaro.
Investors had anticipated a Bolsonaro victory post the first round, with the Ibovespa climbing above 200,000 points. The index's decline following Lula's win stems from doubts about Brazil's fiscal health, potentially eroding recent gains. Morgan Stanley anticipates the Ibovespa falling to around 130,000 points by mid-2027, with the dollar likely reaching 5.50 reais initially, then 5.60 to 5.70 as fiscal risks become more apparent.
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