3 Brazilian Stocks to Watch After Lula's Election Win

Brazilian markets fell sharply after Luiz Inácio Lula da Silva won a fourth presidential term on Sunday, defeating Flávio Bolsonaro with 51.8% of valid votes against 48.2%. Investors had positioned for the opposite outcome, with the iShares MSCI Brazil ETF dropping nearly 20% overnight. The selloff was driven by political fears of state intervention, but analysts see three stocks as well-positioned for recovery. Petrobras fell about 17% despite record production of 3.34 million barrels per day and R$17.4 billion in Q2 payouts. Itaú Unibanco dropped 24%, though it posted strong fundamentals including a 24.3% return on equity and stable non-performing loans at 1.9%. Vale rose 6% as a weaker real benefits its cost base, with pro forma EBITDA up 19% to $4.1 billion in Q2. Key risks include potential fuel price intervention at Petrobras, higher credit costs at Itaú, and Chinese demand for iron ore.