Brazil's stock market experienced a significant decline on Monday following the presidential election results. The market lost over $200 billion in value at the opening bell after Luiz Inacio Lula da Silva defeated Flavio Bolsonaro in the runoff election.
The iShares MSCI Brazil ETF, which tracks major Brazilian companies, dropped by as much as 26% from its previous close of $42.60. By 10:38 a.m. ET, the fund was trading at $32.84, reflecting a 23% loss. This volatility erased gains made earlier in the year.
The Ibovespa index fell by 17% to approximately 170,000 points. The B3 exchange in Sao Paulo triggered a 30-minute trading halt, the first since the COVID-19 pandemic, as the index dropped 10% from Friday's close.
Prediction markets had anticipated a different outcome, assigning Bolsonaro an 80% to 82% chance of winning. According to the Superior Electoral Court, Lula secured 51.79% of the vote compared to 48.21% for Bolsonaro, a margin of approximately 4.4 million votes.
Following the results, Bolsonaro stated he does not recognize the election outcome and intends to request an annulment from the courts. He cited objections to the Supreme Court's decision to extend voting hours as a primary reason for his challenge.
