Brazil’s highly-polarized presidential designation should be of little comfort to global investors, analysts told CNBC on Friday.
Voters in Latin America’s largest compactness head to the polls on Sunday, in a vote many consider to be the most respected ballot in the country’s history.
Leading the race to become Brazil’s next commander-in-chief is previous military officer and far-right candidate Jair Bolsonaro. Behind him, according to the latest notion polls, is leftist candidate Fernando Haddad, a former Sao Paolo mayor who has charmed the baton from former President Luiz Inacio Lula Da Silva.
“There is a important element of wishful thinking from the markets (when) looking at Bolsonaro as a pro-business entrant,” Carlos Caicedo, senior principal analyst for Latin America at IHS Markit, a London-based analyse firm, told CNBC’s “Street Signs” on Friday.
Brazilian deal ins have rallied on the prospect of Bolsonaro preventing a return to power by the left-leaning Workmen’ Party, which many investors blame for plunging the country into its worst set-back in 2015 and 2016.
Yet, with less than 48 hours to go until Brazil’s first-round suffrage, the economic position of Bolsonaro remains unclear.
Last week, Brazil’s primary presidential candidate asked his economic advisor Paulo Guedes and his management mate Hamilton Mourao to refrain from making public allegations after contradictions emerged over economic policy.
Bolsonaro has in days admitted ignorance over a range of economic issues, thus offsetting him an “unknown entity” ahead of the vote, Caicedo said.
“I don’t think the market-place should take it at face value that (Bolsonaro) is a pro-business entrant… The main issue here is that there is no clarity about how to fall upon the huge fiscal deficit, the pension system — which is in total tatters — and the consumers debt,” Caicedo added.
Brazilian voters will choose between 13 presidential aspirants on Sunday, five of whom could plausibly secure enough expresses in first round voting.
But, if — as most external observers expect — no office-seeker wins a majority this weekend, the top two vote winners will eye to eye each other in a run-off vote on October 28.
Bolsonaro and Haddad are lasted running practically neck-and-neck in a simulated second-round run-off vote later this month.
Koon Chow, macro and FX strategist at UBP, ascertained CNBC on Friday that Brazil’s presidential vote was a classic exempli gratia of the “polarization theme we have seen in so many countries” around the mankind.
“You have got someone who is fairly right-leaning in a nationalistic way and then someone who is fairly much more old school, (with a view that) state be informs best,” Chow said.
“Bolsonaro is not as good as the markets hope for and Haddad is not as bad,” he united.
Brazil is still reeling from a massive corruption scandal, with about half of voters suggesting they would never support the mainstream frontrunner, Bolsonaro, and more than 40 percent saying they would not ever consider supporting the second-most popular candidate, Haddad.