A jump in polling for Jair Bolsonaro, the far-right politician leading the race for Brazil's presidency, spurred financial markets on Tuesday as investors wagered his privatisation-friendly policies could boost the flagging economy.
Bolsonaro, an outspoken former Army captain espousing ultraconservative social views and iron-fisted policies on crime and corruption, is seen as the favourite going into the first round of presidential elections to be held on Sunday.
A survey put out Monday by the pollsters Ibope credited him with 31 percent of votes in that round, well ahead of his nearest rival, left-wing Workers' Party (PT) candidate Fernando Haddad, on 21 percent.
That prompted São Paulo's stock market to rise more than three percent on Tuesday, and pushed the Brazilian real more than two percent higher against the dollar.
"Bolsonaro is starting to be the one the financial market most identifies with, mainly for his future finance minister," said Wellington Ramos, an analyst with the consulting firm Austin Rating.
Bolsonaro, 63, has said his choice for finance minister would be Paulo Guedes, a respected, US-educated economist.
"The market is optimistic on Bolsonaro," agreed Andre Perfeito, from Spinelli consultants. Market gains could extend if other surveys confirm Bolsonaro's support, he said.
A polarising choice
Bolsonaro is a polarising figure in Brazil who won sudden prominence ahead of the election, running as an outsider candidate despite being in the country's Congress since 1991.
He has offered degrading comments against women, slammed same-sex marriage and abortion, made racist-tinged remarks and lauded Brazil's past under military rule, all of which have generated a solid core of voter rejection. But he has earned support from Brazil's whiter, wealthier population living mostly in the country's south for his uncompromising anti-crime rhetoric and for being one of very few politicians not to be tainted by corruption allegations.
Brazil is also desperate for a return to prosperity after emerging last year from its worst recession on record as a limping shadow of its once buoyant self. Bolsonaro has promised to secure that by adopting advice from liberal economists such as Guedes. He has vowed to slash public debt by selling off state assets and reform the burdened pension system.
Uncertain final round
The growing support for Bolsonaro makes him the candidate to beat from a dozen-strong field going into Sunday's election. The two top vote-winners will go on to a knockout round on October 28, with the victor taking office in January 2019.
According to the surveys, Haddad is looking most likely to contest a run-off against Bolsonaro.
A 55-year-old former education minister and ex-mayor of Brazil's biggest city São Paulo, Haddad also soared from relative obscurity to be the Workers Party's candidate after its first choice, widely popular ex-president Luis Inácio Lula da Silva, was declared ineligible as he serves a 12-year prison term for graft.
Although he can count on backing from many of Brazil's poorer citizens, mostly in the northeast, Haddad's proposed policies of lifting a freeze on public spending and slowing the pace of privatisations do not sit easily with investors. His steady rise in polling has seemingly stalled.
Surveys suggest a knockout round between Bolsonaro and Haddad would be difficult to predict, with each seen winning around 42 percent of voting intentions according to the Ibope poll.
In the event that Bolsonaro does win the presidency, he would face a legislative challenge to govern. His Social Liberal Party currently has just eight members in the 513-seat Chamber of Deputies in Congress. Sunday will elect a new chamber, but surveys suggest the best his party might do is double that number.
Perfeito said that the markets might be hoping for a Haddad defeat – but "they haven't evaluated the price of a Bolsonaro win."