Brazil ETF took in $4.09B in 3 weeks as a bet on one candidate — then it cratered nearly 20% in just one day

The iShares MSCI Brazil ETF (EWZ) fell 19.8% on Monday, its second-worst day, after President Lula's unexpected election victory. Investors had anticipated a Bolsonaro win, leading to a surge in Brazilian stocks and EWZ inflows. EWZ's year-to-date gain is now 8.5%.

Latin American equities, particularly Brazil-focused ETFs ILF and EWZ, fell sharply following Luiz Inácio Lula da Silva's reelection. Investors fear increased government spending and currency pressure. Brazil makes up 55% of ILF's holdings. EWZ had gained 14% in October on market-friendly expectations. The selloff raises questions about whether it's an opportunity or overreaction.

Luiz Inácio Lula da Silva won Brazil's presidential runoff with 51.8% of the vote, defeating Flávio Bolsonaro. Prediction markets favored Bolsonaro, but traditional polls showed a tight race. Post-election, Brazil-linked stocks and ETFs, including EWZ, Itau Unibanco, and Petrobras, declined significantly.

Brazil's iShares MSCI Brazil ETF (EWZ) fell 23% after left-leaning Luiz Inacio Lula da Silva won re-election, defying projections. Uncertainty over Bolsonaro's challenge to results and potential economic fallout is driving the sell-off. Investors may avoid Brazilian stocks due to ongoing uncertainty.

Brazil's stock market fell sharply after President Lula's victory, with the iShares MSCI Brazil ETF (EWZ) dropping 26% before partial recovery. The Ibovespa index also fell 17%, triggering a trading halt. Investors had anticipated Bolsonaro's win, which would have favored market-friendly policies.

Brazil's real fell 8% against the dollar, and Ibovespa futures dropped 15% after Lula's re-election, contrary to market expectations. B3 exchange widened daily limits. US-listed Brazilian ADRs also declined sharply.