Brazilian equity markets tumbled today after incumbent president Dilma Rousseff won a second term by a narrow margin.
Rousseff, whose economic policies have come under attack by pro-market types, won 51.6% of valid votes in the second round of Brazil's elections this weekend. Her Workers' Party (PT) will now govern for another four-year term.
Brazil's benchmark equity index, the Bovespa, slumped 4.5% after markets opened this morning to 49,593. It is now down nearly 20% from this year's peak in early September.
State-owned oil giant Petrobras, seen as having particularly suffered from Rousseff's interventionist approach, dropped some 12%.
Hopes for a Brazilian economic resurgence had risen this summer as Marina Silva, perceived as a more business-friendly politician, challenged Rousseff for the presidency.
However, Silva was knocked out in the first round of the poll. Rousseff's other rival, the centre-right Aecio Neves, received 48.4% of the final vote.
In her victory speech, Rousseff pledged "dialogue" and to be "a much better president than I have been until now".
Anna Stupnytska, global economist at Fidelity Worldwide Investment, said: "Rousseff's victory in Brazil has dealt a significant blow to market sentiment, not just for investors in Brazil, but in emerging markets (EM) as a whole.
"It is the effort on structural reform that will differentiate the winners from losers in the EM universe over the next few years. Countries like China, Mexico and India are leading the way in improving their growth prospects through reform. Unfortunately, Brazil may have missed an opportunity to join their ranks."
Elsewhere in global markets this afternoon, the S&P 500 opened down 0.15% at 1,961, while an initially positive reaction to European bank stress test results was soon erased in Europe: the DAX reversed early gains to stand to 0.3%, with the UK's FTSE 100 was down 0.5%.
