Top Brazil Investor Says Tightening Race Will End Political Lull

One of Brazil’s most respected asset management firms is expecting the political temperature to rise as the gap narrows between President Jair Bolsonaro and former leftist President Lula da Silva

A street vendor sells towels with images of Jair Bolsonaro, Brazil's president, and Luiz Inacio Lula da Silva, Brazil's former president, near Eldorado dos Carajas, Para state, Brazil
By Vinícius Andrade
April 10, 2022 | 09:29 AM

Bloomberg — One of Brazil’s most respected asset management firms is expecting the political temperature to rise as the gap narrows between incumbent President Jair Bolsonaro and front-runner and former leftist President Luiz Inacio Lula da Silva ahead of the October vote.

“The relative lull in the local newsflow is likely to be only temporary,” Verde Asset Management said in a note to clients Friday. The election race “gives signs that it will be more competitive than what consensus previously expected,” said Verde, which oversees about 45 billion reais ($9.6 billion).

Bolsonaro has been gaining momentum on the back of his government’s new round of cash assistance to the country’s poorest. He’s also gotten a bump as more moderate candidates struggle to gather support, with former Judge Sergio Moro withdrawing his candidacy. A recent survey by Ipespe showed Bolsonaro with 30% of the vote, up from 26% in March, while Lula remained unchanged at 44%.

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The race hasn’t generated increased volatility in Brazilian markets so far. The view that neither Lula nor Bolsonaro is likely to be fiscally irresponsible has helped allay fears of a complete departure from current economic policies. While Lula has been blasting Petroleo Brasileiro SA’s fuel prices and some of his advisers point to more spending, traders are betting his pragmatism and signals toward moderation will prevail.


Buoyed by a rally in commodities, Brazilian stocks are leading global gains this year in U.S. dollar terms with a 32% return, while the real has strengthened more than 18% against the dollar, the most among all major currencies.

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Verde, which is run by industry veteran Luis Stuhlberger and has Credit Suisse Group AG as a minority holder, saw its flagship post a return of more than 19,870% in local currency terms since its 1997 inception. The fund climbed 4.2% in March, its best month in more than a year, thanks to bets on Brazilian stocks and wagers in higher rates in developed markets.