Why Brazil’s Stocks and Funds Like the iShares MSCI Brazil ETF Are Crashing Today
Key PointsMost Brazilian stocks are deep in the red on Monday following Sunday's national elections.
Political turmoil in Brazil is causing significant turmoil in the country's stock markets. Despite predictions that conservative candidate Flavio Bolsonaro would win, left-leaning incumbent President Luiz Inacio Lula da Silva was reelected for a fourth (non-consecutive) term. Not only did Bolsonaro's loss contribute to today's sharp decline in the iShares MSCI Brazil ETF (EWZ -21.75%), but uncertainty surrounding potential legal challenges may further depress the market.
Bolsonaro is fighting to have the election results overturned, as Brazil's supreme court extended voting hours in regions faced with heavy rain. While Bolsonaro's father, former president Jair Bolsonaro, has a history of legal troubles, including a 2023 coup attempt, there's no concrete evidence that Flavio intends to pursue a similar strategy.
The uncertainty surrounding the outcome may prompt investors to avoid Brazilian stocks for now, even though a potential buying opportunity could arise following the market's recent 23% plunge.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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