Brazilian markets prepared for one outcome and received another. Luiz Inácio Lula da Silva won a fourth term in Sunday’s runoff, beating Flávio Bolsonaro with 51.8% of valid votes to 48.2%, a margin of about 4.4 million ballots.
It is the first time since direct elections returned in 1989 that a candidate has won a runoff after trailing in the first round, and Bolsonaro has not conceded.
Investors had positioned for the opposite result. The Ibovespa set a record close on Oct. 5 after Bolsonaro’s first-round lead, and the iShares MSCI Brazil ETF fell nearly 20% overnight as real futures lost about 10%.
That said, three Brazilian stocks look better placed than the index to recover.
Petrobras (PBR)
Petrobras stock tanked roughly 17% in trading on Monday as investors priced in a state-controlled company answering to a re-elected president who has pushed it to invest more.
The worry is pricing: analysts have warned that domestic fuel sits below international levels, a gap that favors consumers over shareholders.
Against that, the company approved R$17.4 billion in Q2 payouts, due in “two installments” in November and December, and its 2026-2030 plan promises $45 billion to $50 billion in ordinary dividends.
Output also reached a record 3.34 million barrels of oil equivalent a day in the second quarter.
A dividend cut, or deeper fuel-price intervention, would undercut the case, though.
Vale (VALE)
Vale shares gained 6% in trading, bucking the trend. The company today is overcoming the weakness that comes with a weaker real, as iron ore is sold in dollars while much of its cost base is in reais.
A weaker real, along with diesel and freight charges, accounted for an 18% rise in Q2 all-in iron ore costs to $61.60 a ton.
Pro forma EBITDA rose 19% to $4.1 billion that quarter, and net debt stood at 0.8 times EBITDA.
Itaú BBA noted in August that VALE shares traded at 4.2 times 2026 enterprise value to EBITDA.
Iron ore prices, which have corrected, and Chinese demand remain the swing factors.
Itaú Unibanco (ITUB)
Itaú Unibanco fell about 24% in trading, a drop well beyond the real’s slide that prices the country’s largest private bank for a fiscal accident.
But its latest financials describe a sturdier business: second-quarter recurring net income of R$12.4 billion, up 7.8% from a year earlier; a 24.3% return on equity; a 12.3% core capital ratio; and delinquency on the expanded portfolio steady at 1.9%.
Cost of credit has held at 2.7% of the portfolio since early 2025.
Higher sovereign yields and the unwinding of rate-cut bets could raise credit costs and slow loan growth, which is the central risk.
The capital position gives Itaú room to absorb that, and the share price now assumes it needs to.
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