Foreign investors pulled R$2.8 billion from the São Paulo stock exchange on Monday and buyers stayed on the sidelines as the selloff following President Luiz Inácio Lula da Silva’s surprise reelection extended into a third day, sending Brazilian equities to their lowest prices since January.
The multi-day slide follows a Monday rout that wiped out more than $200 billion in market value as bullish bets on conservative challenger Flávio Bolsonaro unwound. The benchmark Ibovespa index fell 13.9% on Monday after triggering a 30 minute circuit breaker halt, while the US-listed iShares MSCI Brazil ETF dropped 19.8% on a record $10 billion in volume, touching an intraday low in the $29.50 range that marked a nearly 33% drop from its $43.90 peak. The real sank about 11% against the dollar and the 10 year government bond yield jumped nearly 275 basis points toward 16%, prompting the Treasury to cancel its weekly bond auctions as investors reacted to more than $60 billion in extra campaign spending and a gross debt burden forecast to reach 83% of GDP.