Brazil ETFs were among the best performers Tuesday after a poll revealed far-right presidential candidate, Jair Bolsonaro, was gaining ground among voters.
The iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) rose 5.8% Tuesday and broke back above its short-term resistance at the 50-day simple moving average.
Brazilian markets jumped after a poll published late Monday revealed Bolsonaro’s support rising to 31%, or a 10 point lead ahead of Fernando Haddad, the candidate of the leftwing PT, the Financial Times reports.
“This is clearly favorable for Bolsonaro and markets have reacted positively,” Alberto Ramos of Goldman Sachs told the Financial Times.
The support may also have been partially attributed to further revelations of the PT’s involvement in corruption after an investigating judge announced testimony indicating former president Luiz Inácio Lula da Silva was complicit in illegal payments to the PT from Petrobras, the state-owned oil company.
Revival of Further Brazil Reforms
The markets have supported Bolsonaro partly due to the presidential candidate’s appointment of Paulo Guedes, a University of Chicago-trained financier, as his “one-stop shop” on economic policy. Investors believe Guedes is the best hope of a revival of further reforms, which have stalled in recent years.
Ramos argued that Bolsonaro appears more market friendly as compared to Haddad given his economic platform.