- Executives are competing for access to Flavio Bolsonaro after his first-round showing, a reversal from months ago when weak polling made business leaders more likely to align with incumbent Luiz Inacio Lula da Silva. Andre Esteves, chair of BTG Pactual, helped organise a dinner Lula hosted at the presidential palace a month ago and has since sought to influence personnel decisions in a potential Bolsonaro administration, including promoting his own bank’s chief economist Mansueto Almeida for finance minister.
- A BTG Pactual and Nexus survey released October 13 showed Bolsonaro taking 52% of valid votes against 48% for Lula, from 2,002 voters with a 2 point margin of error. He finished the first round 2 points ahead without reaching the majority needed to win outright.
- Markets moved sharply on that result, with the real rising as much as 5%, stocks posting their biggest gain since 2020 and swap rates falling more than 100 basis points in a single session.
- The lobbying agenda is specific and commercial. Business leaders are arguing for a delay to the tax reform approved under Lula, education groups have proposed candidates to lead the Education Ministry, and others have raised reversing a rule barring some investment funds from buying claims arising from lawsuits or arbitration.
What Happened?
Bloomberg spoke with around a dozen executives across health, infrastructure, commodities and retail. Some are declining invitations to events with Lula’s government, and those who skipped a recent dinner with the president are privately relieved not to be seen as tied to him. Joesley Batista, whose JBS is the world’s largest meat producer, has aides seeking inroads to Bolsonaro’s circle. Marcelo Kayath, formerly head of Credit Suisse in Brazil and now at QMS Capital, and Daniella Marques, former head of Caixa Economica Federal and a main economic adviser to Bolsonaro, are drawing interest from executives seeking clues about economic plans. A spokesperson for BTG and Esteves declined to comment, with a person close to them saying the bank talks to officials across the political spectrum and that has not changed. Batista did not reply. Bolsonaro draws support from those seeking a market-friendly agenda alongside evangelicals, rural voters tied to agriculture and social conservatives. His father Jair, a Trump ally, was convicted of attempting to plot a coup after being voted out of office.
Why It Matters?
The risk executives themselves identify is the right one and it deserves more weight than the enthusiasm. Their concern is not who Bolsonaro appoints but whether those officials retain enough political support to carry out an agenda, citing Salim Mattar, who quit as privatisation chief in 2020 frustrated by the slow pace of asset sales. Appointing market-friendly officials is cheap and reversible; sustaining them through a legislature is the test, and the previous Bolsonaro administration failed it. Anyone pricing the trade on the basis of likely personnel should model the departure risk alongside the appointment. The repositioning itself carries no predictive value and should not be read as one. The same people organising a presidential dinner for Lula a month ago are now seeking meetings with his opponent, which tells you business support follows polling rather than anticipating it. What it does reveal is what access is for, and the agenda is narrow: delaying a tax reform, reversing a rule on litigation claim purchases, placing a ministry candidate. Those are commercial asks rather than a reform programme, and they are the concrete content behind the market-friendly label. On the poll, the 52-48 figure is produced by a bank whose chairman is lobbying for positions in the administration it forecasts. The methodology may be sound and the disclosure still belongs alongside the number. Set against the earlier market move, the fiscal arithmetic has not changed: stabilising a debt ratio at 82.6% of GDP requires a swing of roughly three percentage points, from a 0.6% deficit to a 2% to 3% surplus, and no plan for that has been published.
What Next?
The October 25 runoff is eleven days away and the polling is within the margin of error. Bolsonaro’s economic proposals and the composition of any economic team remain the catalysts that would convert the current narrative into something investors can underwrite, with Kayath and Marques the names to watch. For companies contending with expensive debt and weak domestic demand, the immediate question is whether a new government translates market optimism into lower financing costs. A Lula victory is the scenario that reverses the trade, and most of the premium in front-end rates has already been squeezed.
Affected Tickers and Coins: EWZ, PBR, ITUB
Source: Bloomberg
