After Lula's re-election, XP stops treating changes in public accounts as a base scenario

According to XP Investimentos, the re-election of Lula (PT) gives the government a four-year term, and the strategy of those who invest will need to change in the meantime. The assessment, reported by InfoMoney, changes the starting point for those who operate stock markets, interest and exchange rates.

Before the second round, according to InfoMoney, investors were betting on two movements at the same time: a fall in long interest rates and a rise in the stock market. According to XP, this bet was for a change in the management of public accounts. It was, therefore, a thesis built on the expectation of another fiscal direction.

With the re-election, XP no longer considered this bet as a base scenario. The change is not a detail: what supported the pre-election reading is no longer the main reference for the analysis.

What is at stake is the way in which the next term will deal with public accounts, an issue that concentrated expectations behind interest rate and stock exchange movements before the vote. Without this reference, the scenario becomes more open, and the strategy needs to be reviewed over the four years.

What changes for the investor

For those who invest in the stock market, interest and exchange rates, reading XP indicates that the thesis built around a change in public accounts is no longer the starting point. This suggests reviewing assumptions about long interest rates and the Stock Exchange in light of a government with a four-year mandate, without the analysis pointing to prices or direction for assets. According to the editorial line of this newspaper, which defends fiscal responsibility, the management of accounts remains the point to monitor.

Automatically translated from Portuguese.