After Flávio Bolsonaro led the first round of Brazil’s presidential election, the bank increased positions in Brazilian equities and government bonds. Citi described the result as a market signal.
Citi increased its position in Brazilian stocks after the first round of the presidential election, CNN Brasil reported. The bank also bought NTN-F government bonds maturing in 2031 without currency hedging, according to the outlet.
Senator Flávio Bolsonaro won 47.03% of the vote on Oct. 4, compared with 45.16% for incumbent President Luiz Inácio Lula da Silva. The two advanced to a runoff scheduled for Oct. 25. Brazilian outlets including Folha de S.Paulo confirmed the results; international news organizations reported a subsequent rally in the country’s markets.
In a strategy note cited by CNN Brasil, Citi’s team called the first-round result positive for markets. The bank considers Flávio Bolsonaro more investor-friendly because of his pledges on fiscal restraint, privatization, deregulation and cuts to value-added tax. Analysts also pointed to his party’s strong position in the Senate and the possible effect on passage of his legislative agenda. These are the bank’s assessments, not a guaranteed forecast of the election result or market performance.