Bradesco BBI warns investors that Brazil's post-runoff market selloff may not be over. The MSCI Brazil index fell 18.7% in dollar terms after Lula's reelection — a bigger single-day loss than 2008, Covid, or the 2017 political crisis. Analysts say the damage could take years to heal.
SAO PAULO — Brazil’s stock market just posted its worst single-day drop in modern history, and Bradesco BBI says investors shouldn’t expect a quick recovery. In a note released this week, the bank’s strategists warned that the sell-off triggered after the second round of the presidential runoff may not be over, even with Brazilian stocks now trading at steep discounts.
The numbers are stark. According to the report, the MSCI Brazil index fell 18.7% in dollar terms after the election — a bigger single-day loss than the 2008 financial crisis, the Covid-19 crash, or the 2017 political crisis that nearly toppled a sitting president. Bradesco BBI calls it the sharpest drawdown the Brazilian market has seen in decades.
Why it matters
Brazil is the largest economy in Latin America and a major trading partner for the United States. A market crash of this scale doesn’t stay contained — it shakes investor confidence across the region, slows the kind of foreign capital that funds jobs and infrastructure, and feeds the narrative, already circulating in Washington, that Brazil’s institutions can no longer deliver policy stability after an election.
History isn’t on Brazil’s side. Bradesco BBI’s analysis found 18 trading days since 1990 where the Brazilian market dropped more than 10% in a single session. On average, it took three months just to recover the initial losses. Looking abroad, the bank studied 15 election-related market shocks in other emerging economies and found that, three months after the shock, those markets were still trading an average of 11% below pre-crash levels. Brazil, the bank suggests, is no exception to that pattern.
Cheap isn’t the same as safe. Brazilian equities now trade below eight times projected earnings, making the country the second-cheapest major market in the world. But Bradesco BBI is blunt about what that means: “cheap valuation is not enough to sustain a consistent recovery.” The real problem, the bank argues, is interest rates. Of the 106 companies the bank tracks, 74 face the risk of negative earnings revisions tied to Brazil’s new rate trajectory — with Anima, MBRF, JSL, Yduqs and Ecorodovias flagged as most exposed.
The record
Bradesco BBI has moved to a neutral stance on Brazil rather than a bullish one, and its recommended portfolio reads like a hedge against more pain — exporters such as Embraer, JBS, Suzano and WEG, banks that benefit from high rates like Itau and BB Seguridade, and defensive utilities such as Eneva. None of this is speculation from outside observers; it’s the bank’s own published allocation, built on its own data about what the market just absorbed and what it’s bracing for next.
The Watch Post Daily will continue to follow this story. Source: Bradesco BBI research note, as reported by InfoMoney (Lara Rizerio), October 30, 2026.
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