After voting in the presidential election on Sunday, the market expected Brazil to push ahead with fiscal consolidation, and Morgan Stanley raised the Brazilian stock rating to an overbalance. Flavio Bosonaro unexpectedly took the lead, driving Brazil's various assets to rise. Analysts Nicola Lipman, Julia Nogueira, and Marcos Rios wrote in the research report that they expect the Brazilian stock market to rise up to 20% by the end of the year; if fiscal policy changes, the Ibo Vespa index is expected to reach 250,000 points and rise further in 2027. On Monday, the Igbo Vespa Index surged 7.7%, the biggest one-day increase since March 2020. “Brazil's original fiscal model is no longer sustainable,” analysts said. “The general election opens up the possibility of a new path: fiscal consolidation combined with a slowdown in the domestic economy will eventually crowd out debt and attract investment.” Analysts pointed out that the core is to rely on fiscal consolidation to push market capital from the bond market to stock and physical investment. Local investors were previously pushed out of the stock market due to record high interest rates. The market value of Brazilian stocks in free circulation is about 500 billion US dollars. Morgan Stanley estimates that local investors can add $30 to 40 billion to buy, investors in emerging markets can add $10-20 billion, and global investors can add $30-40 billion.

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