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iShares MSCI Brazil ETF Falls 18% After Lula Election Win
Why is the iShares Brazil ETF down today?
The iShares MSCI Brazil ETF (EWZ) fell about 18% to near $34.80 in overnight trading Monday after Lula won Brazil's election, as investors pulled back from bets on a Bolsonaro win.
Key numbers
| EWZ overnight move | $34.80-18.3% from about $42.50 (per [6]) |
|---|---|
| Runoff vote share | 51.8%Lula vs 48.2% Bolsonaro |
| Brazilian real | about -9%Dollar futures +10% |
| Tokyo-listed Brazil ETFs | -11% to -15%Sources differ on size of drop |
| Brazil small-cap ETF (EWZS) | -17.8%Overnight |
What happened
The iShares MSCI Brazil ETF (EWZ) fell about 18% to near $34.80 in overnight trading Monday after Lula won Brazil's election, as investors pulled back from bets on a Bolsonaro win. Lula won Sunday's runoff 51.8% to 48.2%, a margin of nearly 4.4 million votes. Flávio Bolsonaro refused to concede and said he will ask for the result to be cancelled. Investors had rallied on hopes of a Bolsonaro win after the first round, so some of the selling is those bets being reversed. The Brazilian real also fell about 9% in overseas trading.
Why it matters
The iShares MSCI Brazil ETF (EWZ) is a popular way to own Brazilian stocks from abroad, so its drop shows how fast investor mood turned. Many had expected a government more focused on cutting spending, while Lula has promised to fix the budget without saying how. Part of the fall may be traders undoing their earlier bets rather than a new view on policy. A disputed result adds political uncertainty.
Who this affects
- MarketbearishHigh impact
- Holders of Brazil funds lose; dollar-based investors hit twice.
- CompanybearishHigh impact
- Brazilian companies like Petrobras fell sharply; bad for shareholders.
- CompetitorsbearishMedium impact
- Funds tracking other Brazil indexes also fell, though less.
- IndustrymixedLow impact
- Weaker real makes Brazil cheaper for visitors paying in dollars.
iShares MSCI Brazil ETF vs Franklin FTSE Brazil ETF, iShares MSCI Brazil Small-Cap ETF, NEXT Funds Ibovespa ETF
How we got here
Bolsonaro finishes first in round one; Brazilian markets rally on hopes of a right-wing shift.
Real closes Friday near R$4.98 per dollar; Ibovespa index sits near 205,000.
Lula wins runoff 51.8% to 48.2%; Bolsonaro says he will seek annulment.
EWZ falls about 18% overnight; dollar futures jump about 10% against the real.
What to watch
- How Brazil's own stock market (B3) and the real trade when local markets reopen.2026-10-26
- Whether Bolsonaro files a formal court challenge and whether Brazil's electoral court rejects it.Q4 2026
- Details of Lula's promised plan to fix the budget without cutting social programs.Q4 2026
Educational content only. Not investment advice.
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