Brazil's Rightward Shift: UBS-Hosted Consultancy Puts Bolsonaro's Runoff Election Odds At 85%
Brazil's benchmark Ibovespa index surged above 200,000 for the first time Monday, posting its biggest one-day gain in more than six years, while the real rallied sharply after right-wing Senator Flávio Bolsonaro finished ahead of socialist President Luiz Inácio Lula da Silva in the first round of the presidential election.
Market Reaction:
Bolsonaro received 47% of the valid votes, while Lula received 45.2%. The two will face each other in an October 25 runoff, with Brazilian political consultancy Ideia Big Data forecasting a Bolsonaro victory.
Via Bloomberg
UBS hosted Ideia Big Data on Tuesday to assess the outlook for the October 25 presidential runoff. The consultancy firm assigned Bolsonaro an 85% probability of victory.
UBS Latin American equity sales executive Justin Wensek summarized the discussion:
UBS hosted Brazilian political consultant Ideia Big Data for an update on the election and outlook for the runoff on October 25. Brazilian political consultancy Ideia Big Data sees Flavio as the clear favorite heading into the Oct. 25 runoff, assigning him an 85% probability of victory and projecting a 52%-48% split over Lula.
Ideia argues there is no obvious catalyst capable of reversing the erosion in support for Lula and the PT. The consultancy was not surprised by the first-round outcome, noting that Lula already captured around 90% of voters who approved of the current government, while abstention historically costs the PT roughly 1.5 percentage points. The late shift of support from third-way candidates towards Flavio, which was evident ahead of the first round, also reappeared.
The PT's strategy is expected to focus on mobilizing voters who did not participate in the first round, mirroring tactics used successfully by Gustavo Petro's coalition in Colombia and by Lula's campaign in 2006. However, Ideia believes the margin is substantially wider this time, making the task more challenging. Lula is also seen needing at least 60% of third-way votes to overturn the gap, while recent losses in key southeastern states further complicate the picture.
On the campaign trail, Flavio is expected to avoid several televised debates, limiting opportunities for Lula to shift momentum. Ideia expects a highly contentious second round marked by frequent attacks from both camps, but does not anticipate any major political developments capable of materially altering the race. While additional noise surrounding the Banco Master scandal and Supreme Court activity is possible, the consultancy does not expect these issues to meaningfully affect voter preferences.
Assuming a Flavio victory, Ideia believes he would still face governance challenges given the polarized nature of the electorate. The consultancy views him as likely to be a weaker president than his father and notes that proposals such as ending presidential re-election could broaden political support, though the hurdles to implementing such changes remain significant.
Latest Polymarket odds:
Bloomberg is finally acknowledging what we have been tracking: a once-in-a-generation shift in South America's political landscape, as socialists are rejected at the polls after years of implementing nation-killing progressive experiments that have ruined economies.
"The market wants change, it wants reform, it doesn't want a high public deficit; with the current government, all of this will continue," Pedro Galdi, an analyst at AGF Investments, told Reuters.
... and this rightward shift is sweeping across the West, as Nomura analysts expect Europe to "lurch" right over the current election cycle underway.