The EWZ is up 20% on cost basis since our entry and around 15% on the day in response to the results of the first round of the Brazilian presidential election held yesterday, October 4, 2026.
It’s good to see another position performing well, keeping the momentum going after some recent wins.
The market is reacting to a strong showing by pro-business candidate Flávio Bolsonaro (Liberal Party), who captured 47.03% of the vote to narrowly edge out the incumbent, Luiz Inácio Lula da Silva (Workers’ Party), who secured 45.16%. Because neither candidate reached the 50% threshold, the two will advance to a runoff election on the 25th of October.
This has fuelled optimism about a potential shift in economic policy, and hence, Brazilian equities are rallying. Investors generally favour the Liberal Party’s platform of deregulation, privatisation, and fiscal discipline over the incumbent administration’s state-driven economic approach. There is likely also anticipation about the Selic rate dropping, which has been sitting in the mid-teens, and as such, it is not a surprise Brazilian stocks had been carrying such low multiples.
It is an unusual situation when an index is up 15% in a day, and as such, we have a decision to make. My thoughts are below.
