Brazilian real, EWZ and ADRs plunge abroad

In brief

Brazilian assets plunged abroad after Lula reelection.

EWZ fell nearly 20% and the real about 10%.

Verified fact · material
EWZ, the main Brazil ETF in New York, was down roughly 18% to 20% in off-hours trading on the night of October 25, after Lula reelection.
EWZ.
Sources[01][02][03]
Verified fact · material
The real was losing about 10% against the dollar in CME-traded contracts after the result.
FX.
Sources[04][05][03]
Verified fact · material
Petrobras and Itaú ADRs were down more than 15% in New York overnight trading.
ADRs.
Sources[02][03]
Verified fact
According to Exame, part of the swing reflects thin overnight liquidity.
Liquidity.
Sources[03]
Verified fact
According to Bloomberg Línea, an Ibovespa ETF listed in Tokyo fell 13% at the October 26 open.
Tokyo.
Sources[05]

Transmission to assets

Overnight figures are preliminary and illiquid; the real test is the B3 open.

USD/BRLnegative

Real weakens on fiscal risk.

Overnight liquidity distorts price.

What would change the view: Open confirms drop.

currency40% confidence

Ibovespanegative

Brazilian stocks fall abroad.

Rebound at open.

What would change the view: B3 follows abroad.

direct40% confidence

Direction is an explanatory hypothesis, not a forecast or recommendation.

Next signals

Limits of the reporting