Brazil is holding an election — and for the stock market, there’s more to gain than to lose, says fund manager

Brazil heads to the polls Sunday, and one emerging-market fund manager argues the equity setup is asymmetric — with more to gain than to lose. The key variable is whether Flavio Bolsonaro outperforms current polling. If he does, the manager sees room for a sharp rally in Brazilian stocks, suggesting markets may already be braced for a weaker showing than could materialize.

The logic rests on expectations rather than fundamentals. When positioning is defensive and polls set the baseline, an upside surprise can force a rapid repricing as investors adjust exposure. That dynamic has historically mattered in emerging markets, where political outcomes can shift sentiment quickly and liquidity can amplify moves in either direction.

For observers, the focus after Sunday is the gap between results and pre-election polling, and how quickly it narrows. Also worth watching: whether any rally broadens beyond a narrow set of beneficiaries, and whether currency and bond markets confirm the equity move. A single session's reaction is not a trend — but it can reset the debate.