According to Decrypt, the iShares Brazil ETF declined by up to 26% following Luiz Inácio Lula da Silva’s victory in the Brazilian presidential election over Flávio Bolsonaro. The outcome came amid widely held expectations that Bolsonaro would win, as prediction markets had assigned him an 80% probability of success prior to voting. Concurrently, the US dollar increased by up to 12% relative to the Brazilian real.
The ETF’s drop reflects market reaction to the surprise result, with Lula securing election despite Bolsonaro’s favored status in earlier probabilistic assessments. The currency movement shows the real weakening against the dollar under the new political context.
