Lula's Shock Election Win Sends XP Down 46% as Brazil Trade Unwinds
XP is trading near its 52-week low of $14.8 (5.6% above the low).
Summary
Leftist incumbent Lula beat right-wing Senator Flávio Bolsonaro in Sunday's runoff, a result investors had not positioned for. XP is down 46% premarket, the sharpest move among U.S.-listed Brazilian names, with Nu Holdings off 21%, AmBev down 13%, Itaú down 28% and Petrobras down 23%. The reversal is violent because the market had rallied in early October on first-round results that made Bolsonaro the favorite — XP itself jumped 32.8% to $28.25 on October 5. The worry is fiscal: Lula cut taxes, added a stipend for low-income students and shortened the maximum work week during the campaign, and Brazil's gross debt is already about 87% of GDP per the IMF. XP carries the most direct exposure of the two tagged names given its Brazil-only revenue base, while Nu's Mexico and Colombia operations offer partial offset.
At the time of this announcement, XP was trading at $15.63 on NASDAQ in the Finance sector, with a market capitalization of approximately $15.7B. The 52-week trading range was $14.80 to $32.73. This news item was assessed with negative market sentiment and an importance score of 9 out of 10. Source: Dow Jones Newswires.