BRAZIL: Ibovespa Falls As Electoral Uncertainty Remains After Lula's Arrest

(RTTNews) - Contrary to world markets, the Ibovespa fell 1.78% Monday, closing at 83,307.23 points, with a steady outflow of foreign investments amid uncertainties regarding the electoral scenario for this year, even after the arrest of former President Luiz Inacio Lula da Silva and his possible withdrawal as a candidate.

Rumors of a political arrangement to launch former Justice Joaquim Barbosa as a presidential candidate, with environmentalist Marina Silva as his deputy, were seen as a potential threat to pro-reform candidates.

"Both [Henrique] Meirelles and [Geraldo] Alckmin did not show big gains from this Lula exit. The first surveys will show this, and the market should wait for those numbers," said Terra Investimentos analyst Regis Chinchila. A possible entry of Barbosa as a candidate still brings doubt and shakes the market, he added.

According to Igor Caixeta , an analyst at Toro Radar, there was a consistent outflow of foreign investors from the Brazilian stock exchange, which also helped to raise the U.S. dollar by 1.57% against the Brazilian real. The locally traded U.S. dollar closed at R$ 3.421, at the highest closing level since December 5, 2016. "The search for the dollar ends up being more intense at times of profit-taking," Caixeta noted.

Caixeta said that there are several presidential candidates in Brazil and the result is unpredictable. "The Ibovespa was close to a historic top, it does not outweigh the risks for investors to be bought at a historic top at a time like this," said Caixeta.

In the business sector, Marfrig shares rose 18.81% after the announcement of the purchase of the fourth largest beef producer in the United States, National Beefs. Meanwhile, Eletrobras shares fell 9.55% due to the appointment of Moreira Franco to take over the ministry of Mines and Energy.