Brazil ETF Plunges 27% After Lula’s Election Victory

The iShares MSCI Brazil ETF fell 27% in premarket trading after President Luiz Inácio Lula da Silva won re-election, a sharp response to a result investors had not expected. Brazilian shares also tumbled, while the country’s currency fell in Asian trading. The selloff came just hours after the vote count confirmed Lula’s narrow victory in Sunday’s runoff. ^10,1

That runoff followed a first round in which Senator Flávio Bolsonaro, son of former president Jair Bolsonaro, finished ahead. Lula, a former metalworker and trade union leader, won 51.79% of the final vote to Bolsonaro’s 48.21%, securing a fourth term. His campaign rallied supporters after the first-round setback, reaching younger voters through selfie videos and a WhatsApp channel that grew to nearly 11 million followers. A final debate exchange also drew attention after Bolsonaro mocked Lula’s missing finger; Lula answered by recalling that he had worked nights as a teenager to eat. ^1,3,4

The 27% plunge reflects investors’ concern about what Lula’s win may mean for Brazil’s economy. Bolsonaro was seen as more likely to seek spending cuts and fewer rules for business, while investors now want Lula to show how he will manage the country’s debt. The election remains contested: Bolsonaro says he will seek to cancel the result, objecting to a two-hour extension of voting. Both campaigns had asked for polling stations to stay open longer, according to the report. ^7,1

That debt concern now becomes a test for Lula as he prepares to take office again. His new four-year term is scheduled to begin on January 5, 2027. He will need to address market fears while carrying out his plans for social support and workers’ rights. The immediate next step is Bolsonaro’s promised bid to cancel the result; the sources report no ruling on that challenge. ^6,7