Replies to post #1028 on Petroleo Brasileiro S.A. - Petrobras (PBR)

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Brazil President Rousseff Favored To Win, Eurasia Group Says


By Dimitra DeFotis

http://blogs.barrons.com/emergingmarketsdaily/2014/10/16/brazil-president-rousseff-favored-to-win-eurasia-group-says/?mod=yahoobarrons&ru=yahoo


(l. to r.) Reuters, Associated PressBrazil Presidential candidate Aecio Neves, left, and Pres. Dilma Rousseff.
With the latest poll results in, the incumbent president of Brazil has a 60% probability of winning the runoff election on Oct. 26, Eurasia Group says.

Brazil’s Bovespa Index is down 2.2% today, and the iShares MSCI Brazil Capped ETF (EWZ) is down nearly 3%, while the EGShares Brazil Infrastructure ETF (BRXX) is down more than 3%. The iShares MSCI Emerging Market ETF (EEM) is down 0.6%.

The latest national election polls, by IBOPE and Datafolha, were released last night and show candidate Aecio Neves, who is more conservative and favored by investors, ahead of Dilma Rousseff. By 2 points. Eurasia Group’s Christopher Garman, Joao Augusto de Castro Neves and Cameron T. Combs write today that the result is the same as polls showed last week.

But Rousseff’s approval ratings improved and Neves’s rejection numbers increased.


This “suggests that while voter intentions remained constant the president’s campaign is gaining some momentum. This reinforces our assessment Rousseff remains favored to win (60% probability) a second round runoff on 26 October.”

Televised debates restarted, and the scandal at the state-controlled energy giant Petrobras, or Petroleo Brasileiro (PBR) is at center stage. Shares of Petrobras are down nearly 5% today. Eurasia Group writes:


“It is important to remember that the PT’s campaign only pivoted to a more negative attack strategy against Neves on Monday. From last Thursday (9 September) through Sunday (12 September), Rousseff’s campaign went into defensive mode given their concern over the repercussions of the Petrobras scandal. But Rousseff’s more aggressive stance in the past few days has not only helped her counterbalance the barrage of negative news against the government, but also call attention to Neves’s potential liabilities, which haven’t been fully explored yet. Three more debates in the next several days (tonight, 16 October, and 24 October) and ongoing TV broadcasts will give Rousseff an opportunity to keep the momentum by doubling down on the attack strategy against Neves. As a result, we expect her to hold a lead in the polls by early next week, and win the second round runoff.”