Brazil’s presidential election happens in Q4 of this year (2022). Bolsonaro, the current president, can in some ways be described as a Trump clone. He admires Trump, publicly doubts the US election result, and is facing a similar turn in sentiment against him during election year, and towards legendary leftist and former President Lula.
More concerning is the likelihood that, in the event of a loss by Bolsonaro, a rocky transition of power or lack of transition altogether occurs. Bolsonaro has also torn another page from the Trump playbook of sowing doubt in the accuracy of vote counting.
The military plays a role in deciding the outcome as well, as backing from senior military leaders can accelerate, delay or block transition altogether. Bolsonaro fired his Minister of Defense and all three heads of Navy, Air, and Army resigned in protest. The backfill was a set of loyalists.
What does that mean for Brazil based investment firms? In some sense the geopolitical undercurrents globally have increased uncertainty of political and economic stability. Brazil has had chronic issues but also done some things right. The answer is, who knows. But I do like that we own investment firms that tend to thrive in periods of volatility. Both companies we own will have first closes of flagship vehicles before Q4. Both are establishing permanent capital bases. And their management teams have been through multiple left and right leaning regimes.