Brazilian assets are cratering this morning after a surprise win by the incumbent Luiz Inácio Lula da Silva (Lula), who is considered the more “market-unfriendly” candidate.

We got bullish Brazil back in mid-summer given a) overstated political risks around the Lula admin maintaining power were dragging down asset prices and b) Brazil is natural resource rich: agricultural powerhouse, net oil exporter, 2nd largest rare earth reserves after China.

We re-flagged this in October after Brazilian assets popped on the back of an excepted win from the more “market-friendly” candidate Flavio Bolsanaro.

We’ve been bullish EM vs DM equities for most of the year, but specifically flagged