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Opinion

Bolsonaro’s Trumpian pact

Jair Bolsonaro's election today as Brazil’s next president could well spell more market upside, but the nationalist protectionism that is likely to follow should give investors pause

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The Brazilian markets have been soaring in recent weeks as it became increasingly likely that Jair Bolsonaro would become Brazil’s next president.

The real has been rallying; so too has the Bovespa.

Now that Jair Bolsonaro’s victory as president has been confirmed, there is almost certainly more upside to come as the markets get even further ahead of themselves.

Brazilian payments system Stone’s IPO, which caught the wave of positive sentiment about Brazil in the run-up to Bolsonaro’s win on 28 October to list on the Nasdaq on 25 October, has already broken the country’s IPO drought.

Other equity transactions will surely follow swiftly, and a solid pipeline of international bond deals from Brazilian international issuance is also expected before the end of the year.

These should perform well: there has been relatively little Latin American deal volume this year and any ‘Bolsonaro bounce’ could be quite large.

But those investors who are readying to invest in Bolsanoro’s Brazil would do well to think deeply about exactly what type of country they might be jumping into.

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