As Brazil inches toward national elections on Oct. 26, a renowned short seller is reiterating his bearish view on one of country’s largest companies and the largest holding in the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ).

In a Bloomberg Television interview on Monday, Jim Chanos, the founder and president of hedge fund Kynikos Associates, said Petrobras (NYSE: PBR) has such poor economics that it should be “calle a scheme, not a stock.”

Petrobras, Brazil’s state-run oil company, is by way of two securities, EWZ’s largest holding at a combined weight of 11.6%. Making Chanos’ bearish call on Petrobras, one that he unveiled over two years ago, all the more ominous for those bullish on EWZ and Brazilian stocks is that the hedge fund manager sees little upside for the stock regardless of who emerges victorious in Sunday’s election – President Dilma Rousseff or challenger Aecio Neves.

EWZ tumbled on heavy volume Monday after MDA’s first poll since Brazil’s Oct. 5 first-round election showed President Dilma Rousseff with 45.5% of voter support compared to 44.5% for challenger Aecio Neves. “Excluding undecided voters, spoiled and blank survey responses, Rousseff has 50.5 percent against 49.5 percent for Rousseff,” according to Reuters. [Rousseff Rattles Brazil ETFs]

“If Neves wins, this is underwater. If Dilma wins, this is really underwater,” Chanos said of Petrobras in the Bloomberg interview.

Since Rousseff came to power in January 2011, shares of Petrobras have plunged by over 66%, making it the worst-performing major global oil stock over that period. Some market participants have the perception that Rousseff has corrupted the government’s relationship with Petrobras and that her heavy-handed approach to the oil company is on par with what Hugo Chavez did to Venezuela’s energy industry. [Risk-Reward Evaluation of Brazil ETFs]

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