The drop of more than 12% of the Ibovespa this year will leave wounds, especially in those who cultivated the hope that the pandemic had an expiration date and bet on the market recovery in 2021. But the data bring good news for those who like the market for actions, look at this.
The fiscal disaster, the sluggish economy and runaway inflation have made life difficult for investors. The scenario worsens with the uncertainty typical of an election year.
The Bolsonaro government’s focus on re-election has already become clear to big investors. The lack of perspective for structural changes and the lack of commitment to the spending ceiling drives money away from the country and makes the market more volatile.
It turns out that Jair Bolsonaro (PL) is not the first president that Brazil has ever had. And it won’t be the last. Despite being young, our democratic experience after the military dictatorship serves as a basis for comparison and a thermometer for the financial market.
An exclusive survey carried out by the Mercado Monitor website shows that the prospects for the Stock Exchange until October, when the next elections take place, are, indeed, one of the worst. However, after the storm, the market tends to breathe a sigh of relief, regardless of who is victorious.
The study shows that in the last six elections, the semester immediately before the election tends to be negative for Ibovespa, while the six months following the vote tend to be positive.
On the eve of Fernando Henrique Cardoso’s re-election, in 1998 (first available data), the index dropped by around 45% in just six months. Before Lula’s first election (2002), the drop was practically 35%.
However, after the vote, the Exchange tends to react well. In the first six months after FHC’s reelection, the Ibovespa rose by an impressive 60%. After Lula’s reelection (in 2006), our market’s main indicator gained about 25% in its score.
Except for Dilma Rousseff’s (2010) first election, all votes followed the same logic: the six months after the definition of the new president were positive for the stock market.
The reasoning does not seem to make a distinction between candidate or party. Representatives elected by PT, PSDB or PSL had their honeymoon with the market.
When we increase the period of analysis, looking at the 12 months after the election, the increases in the Ibovespa are even more significant. They ranged from a 22% increase after Bolsonaro’s confirmation to a 75% increase with Lula’s first election. The exception, again, is the responsibility of Dilma Rousseff. Immediately a year after his two wins at the polls, the market was falling.
As you may know, what bothers investors more than anything else is uncertainty. And the eve of any election is a real Russian roulette, although polls try to mitigate this, the degree of unpredictability remains very high.
Of course, six elections are not a perfect basis for determining trends, but it is essential to consider the data at hand when choosing our investments. And the past often says a lot about the future.
Speaking of the future, a happy New Year, with great investments, quality information and good deals!
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I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
