Your Emerging Market Funds Face a Tight October 25 Runoff in Brazil
A close presidential runoff between Lula and Flávio Bolsonaro is driving volatility in broad emerging market ETFs and major state-controlled assets.
If you hold broad emerging market funds in your brokerage account, your portfolio is directly exposed to a high-stakes political showdown in Latin America's largest economy. On October 25, 2026, Brazil will head to a presidential runoff that has already injected fresh volatility into major international funds and state-controlled corporations.
The runoff was triggered after the first-round vote on October 4, 2026, delivered a major surprise to political analysts and pollsters. Challenger Senator Flávio Bolsonaro—the 45-year-old son of former President Jair Bolsonaro—secured 47.03% of the valid votes. He finished ahead of the 80-year-old incumbent President Luiz Inácio Lula da Silva, who garnered 45.16%, according to official data from Brazil's Tribunal Superior Eleitoral.
Regardless of who wins the presidency, the legislative landscape has already shifted dramatically to the right. In the concurrent legislative elections, Flávio Bolsonaro's Liberal Party (PL) won a dominant congressional presence. The party secured 121 seats in the 513-member Chamber of Deputies and 28 of the 81 seats in the Federal Senate, according to official election results published on October 4, 2026. This conservative majority will heavily shape Brazil's fiscal, budgetary, and tax reform agendas over the coming years, serving as either a collaborative partner for a Bolsonaro administration or a powerful roadblock for Lula's Workers' Party.
For global investors, the immediate impact of this political polarization is felt through state-controlled enterprises. Companies like the state-run oil giant Petrobras and the lender Banco do Brasil have experienced heightened price swings as Wall Street weighs the candidates' opposing philosophies. While Lula has historically favored using state-owned firms to drive national development and cap consumer prices, Flávio Bolsonaro has campaigned on a market-oriented platform emphasizing spending cuts, deregulation, and a more hands-off approach to corporate governance.
With polls showing the candidates in a technical tie and prediction markets shifting rapidly, the final days before the vote are keeping emerging market asset managers on edge.
In your brokerage app
If you own broad emerging market index funds like the Vanguard FTSE Emerging Markets ETF (VWO) or the iShares Core MSCI Emerging Markets ETF (IEMG), you hold indirect exposure to Brazil's largest corporations. For direct exposure to the country's equity market, investors often use the iShares MSCI Brazil ETF (EWZ), which is listed in New York and tracks the performance of the largest publicly traded Brazilian enterprises, including Petrobras and private sector giants like Vale.