Senator and Liberal Party leader Flávio Bolsonaro’s unexpected win in the Brazilian elections on Sunday was well received by the market, as evidenced by the strong appreciation of the real and the rise in Brazilian stocks. 

Argentine stocks and sovereign bonds also benefited from the rally coming from the neighboring country. 

The news is an early sign of something market analysts are already predicting: that President Javier Milei and his administration would be another of the beneficiaries if the opposition candidate triumphs in the runoff at the end of the month.

For Sergio González, investment office head at brokerage firm Cohen Aliados Financieros, the “compression of the region’s risk premium,” a product of the expectation of a more fiscally disciplined government with a more capital-friendly stance, tends to attract flows toward Latin American assets. 

“That favors Argentine sovereign bonds in dollars, local stocks with exposure to Brazil, and Brazilian cedears,” he told the Herald.

For international market analyst Martín Cordeviola, of the brokerage firm Portfolio Personal Inversores (PPI), however, the effect on Argentina’s stocks, bonds, and country risk would be limited. 

“A better climate in Brazil can attract flows toward the region and improve the general tone of Latin American assets, but in the Argentine case, local factors weigh much more,” he said.

A stronger real........

© Buenos Aires Herald