Brazil Stocks Whipsawed With Real After Candidate's Plane Crash

Wednesday, 13 Aug 2014 12:46 PM

 

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Brazilian stocks and the real whipsawed higher and lower after a plane used by opposition presidential candidate Eduardo Campos crashed in Sao Paulo state.

Campos’s campaign confirmed it couldn’t reach him after a small plane went down in the port city of Santos, and Globo News reported that the candidate had died. Campos, who was polling in third place ahead of the October elections, was flying to an event in the neighboring city of Guaruja at the time, according to O Estado de S. Paulo newspaper.

Stocks and the real plunged initially before paring losses as investors sought to quickly analyze the impact the crash would have on Brazil’s presidential vote. The stock gauge had rallied 26 percent from this year’s low March 14 on speculation that President Dilma Rousseff would be defeated and the new government would reduce intervention in state-owned companies.

“If Campos doesn’t run, all the polls we’ve seen so far become worthless,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro. “Elections are the main driver for the market now, but without Campos, uncertainty increases. And market will only find a direction once new polls become available.”

A poll by public opinion research company Ibope, released Aug. 7, showed support for President Dilma Rousseff before the Oct. 5 election unchanged at 38 percent. Campos would win 9 percent of votes in the first round of elections, the poll showed.

The benchmark Ibovespa equity index was down 1.2 percent at 55,787.06 at 1:20 p.m. in Sao Paulo, after sinking as much as 2.1 percent. The real gained 0.1 percent to 2.2759 per dollar, after earlier losing as much as 0.7 percent.

“The market is reacting amid a mix of cautiousness and nervousness,” Silvio Campos Neto, an economist at Tendencias Consultoria Integrada, said in a telephone interview.

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