The death of socialist presidential candidate Eduardo Campos in a plane crash last week has catalysed the Brazilian race, with the emergence of a pragmatic new runner for the left-wing party.
Hermes Fund Managers head of global emerging markets Gary Greenberg says since the death of PSB socialist party leader Campos the South American giant has taken a “new turn”.
At the last poll, the late Campos commanded just a tenth of the vote, half that of PSDB party social democrat Aécio Neves.
Both candidates trailed incumbent Dilma Rouseff, of the PT workers’ party, with 30 per cent.
However, the likely replacement for Campos is Marina Silva, a popular environmentalist who unsuccessfully tried to launch her own party.
A poll on Monday showed Silva would capture 47 per cent of the vote if she ran in Campos’ place if she made it to the final round of voting.
“The new leader of Brazil’s socialist party is rallying opposition against the incumbent government and stoking the nation’s desire for reform,” Greenburg says.
Despite being an environmentalist, she is expected to be good for the economy and business, he adds.
“Silva is like Lula, the popular ex-president of the PT party: idealistic, charismatic, and from a poor background,” he explains.
“But she has recruited an economic team that is more in line with Neves’ market-friendly PSDB party. This attractive combination is what drew not only ‘undecided’ voters to vote for her but also PT supporters that want to continue spending on social programmes but with more prudent fiscal management.”
Rumours are circulating that Silva, a northern politician, could be joined in the race by Beto Albuquerque, a congressman of the Rio Grande do Sul in the south.
“Which not only widens the national appeal of the PSB party but also threatens the PT party’s southern stronghold,” Greenburg says.
If she does not make the second round elections against Dilma, Neves is likely to win as an “anyone but Dilma” attitude is gaining traction in the country.
“Thus there is now a good chance that Dilma will not win the elections which we believe would be positive for the Brazilian market,” Greenburg says.
The potential for reform after several years of government meddling in the private sector for political gain will take the market to “new highs” the closer it gets to reality, he adds.
Ashmore head of research Jan Dehn says the late Campos was not expected to win the presidency and Silva is “more formidable” due to her honest and principled reputation.
“She is from the north east and she commands a strong following – she polled 20 per cent of the vote in the first round of the previous presidential election,” Dehn explains.
“She is left of centre and could take votes from President Rousseff, but her economic policies are expected, for the most part, to be better than those of the current administration, so she could also win support from the centre-right.”
Meanwhile, the uncertainty unleashed by Campos’ death is unlikely to pass until the next polls are released, he adds.
“For now, the main implication of Campos’s demise is that it turns this election into a potential three rather than a two-horse race.”
He expects the economy to keep limping along in the hang over of the World Cup, with a moderate rebound coming in the next few months.
“But a strong rebound seems unlikely.”