The iShares MSCI Brazil Index (NYSE: EWZ) is up 2% in the past week as far-right President Jair Bolsonaro announced he would be leaving his right-wing Social Liberal Party (PSL) and launching his own Alliance for Brazil (APB) party.

Bolsonaro said he left the PSL due to a dispute with the party’s founder over campaign funds. He later said the APB platform will be focused on advancing Christian values and fighting corruption in Brazil.

Why It’s Important For Brazil And EWZ

Since the first round of Brazilian elections in October 2018, the EWZ ETF is up 17.3% overall. Bolsonaro ran on a platform geared toward improving the economy, cracking down on corruption, making the Brazilian central bank more independent, and transitioning state-run companies to the private sector.

Former Brazilian President Luiz Inacio Lula is currently serving a 12-year prison sentence for corruption. Under Lula’s leadership, Brazil’s national deficit expanded significantly and the nations pension system became unstable.

Bolsonaro’s stances on abortion, homosexuality and marijuana also won him favor among Brazil’s Christian voting base. However, critics have blasted Bolsonaro his racist, homophobic and misogynistic comments.

Bolsonaro took over as president of Brazil in January 2019, and his move to create his own party is a risky one at this point. The APB must collect roughly 500,000 signatures within the next six months to officially register for next year’s municipal elections.

Benzinga’s Take

In the near term at least, it’s unlikely the new party will change the economic fundamentals in Brazil or have an impact on any of the major U.S.-listed Brazilian stocks. Here are some of the most popular Brazilian investments:

• PETROLEO BRASIL/ADR (NYSE: PBR)

• Itau Unibanco Holding SA ADR (NYSE: ITUB)

• Banco Bradesco SA (NYSE: BBD)

• AMBEV S A/S ADR (NYSE: ABEV)

• Vale SA (NYSE: VALE)

• Banco Santander Brasil SA ADR (NYSE: BSBR)

• Telefonica S.A. (NYSE: TEF)

• Companhia de Saneamento Bsc DEDSP (NYSE: SBS)

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

Brazilian Stocks Soar On Election Results

Wall Street Is Warming Up To Petrobras

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