RIO DE JANEIRO/SAO PAULO, (Reuters) – Long-term foreign investors are growing more optimistic about Brazil no matter who wins this month’s presidential election but they say an opposition victory could unleash a flood of new money.
The tight and fast-changing election campaign has sent Brazil’s financial markets on a wild ride with big gains whenever leftist President Dilma Rousseff loses ground in polls and slides whenever her re-election bid seems stronger.
Rousseff’s economic policies have been roundly criticized by investors for tipping Brazil into a recession while damaging state-run companies such as oil producer Petrobras and lender Banco do Brasil along the way.
Her business-friendly opposition rival Aecio Neves has promised stronger fiscal control and less government intervention in state firms if he is elected, winning the support of most market players.
Beyond the swings of a neck-and-neck race, however, long-term sentiment on Brazil has improved.
Investors are betting that either Neves will win the runoff on Oct. 26 or that Rousseff, chided by a very narrow margin of victory, will adopt more market-friendly policies in a second term.
“Either things are significantly better, or a little bit better,” said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management, which oversees about $1 trillion in investments.
After hitting a five-year low in mid-March, the benchmark Bovespa stock index has since gained more than 20 percent and is up over 5 percent in 2014 – by far the best performer among key Latin American bourses.
