Brazil markets tune in to Apprentice star’s shock win
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Emerging Markets

Brazil markets tune in to Apprentice star’s shock win

Apprentice

The meteoric rise of a neophyte politician in Sunday’s local polls in Brazil may have a strong impact over the 2018 presidential election, according to investors and analysts.

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Some rights reserved: Aécio Neves / Flickr

João Doria, the new mayor-elect of São Paulo, Brazil’s largest financial centre, came out of nowhere to clinch a surprise first round victory just over a month after the impeachment of Dilma Rousseff.


Financial markets applauded the triumph of the conservative, pro-privatisation Doria who once anchored a local version of Donald Trump’s Apprentice TV show, over the outgoing leftwing mayor Fernando Haddad, who belongs to Rousseff’s workers’ party (PT). The Bovespa stock exchange rose 1.9% on the result in spite of a negative external environment. 

In the longer term, the surprise outcome of the São Paulo election is a clear boost to Geraldo Alckmin, the governor of São Paulo, who will become one of the main presidential contenders at the 2018 presidential election.

“Alckmin has come out on top. As of this moment, he is the obvious candidate of his party [PSDB],” says Monica de Bolle, a Brazilian fellow researcher at the Peterson Institute for International Economics. Alckmin was the only leader of the PSDB who supported Doria, a mix of socialite and businessman, while others snubbed him. 

“He is not a traditional politician, he is someone from outside. This may tell you that the 2018 election may look a bit similar,” says Ramon Aracena, the Latin America chief economist at the Institute of International Finance (IIF). The anti-corruption probe known as lava jato which has exposed links between some large companies and politicians in the Petrobras scandal, had a “big impact” on the results, he said.

Within weeks, two former finance ministers of the PT governments were questioned by the police. One of them — Antonio Palocci — has been detained and former president Luiz Inacio Lula da Silva was charged with corruption.

“The PT has lost a lot of ground, maybe in more than 300 cities. People do understand what is going on there, and they are punishing those who are perceived to be corrupt. They are giving a reward to those who are perceived not to be corrupt, especially those who do not belong to the political establishment,” he says.

“Brazilian politics are shifting towards the centre-right. This trend might be further accentuated in 2018,” said David Fleischer, a political scientist in Brasilia. This may strengthen the momentum for economic reforms that the current administration is currently trying to push through, including a cap on public spending.  

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