Lula wins in Brazil: Ibex impact

Luiz Inácio Lula da Silva has secured victory in the second round of Brazil’s presidential elections, held last Sunday, October 25th. The result, narrow against the conservative coalition, confirms the Workers’ Party (PT) will remain for a new term.

October 27, 2026  |  3 min read

The final data from the Superior Electoral Court consolidates a political scenario that immediately impacts the valuation of Brazilian assets and Spanish companies with strategic interests in the South American country.

The Ibex 35 reflects this uncertainty with significant declines in its stocks with the greatest geographical exposure. Banco Santander, Telefónica, and Iberdrola, whose income statements largely depend on their operations in Brazil, are leading the losses at the opening of the trading session. The Spanish selective index is testing critical support levels given the possibility of structural changes in fiscal and regulatory policy that the new executive may implement in the coming months.

Regulatory risk and stability of financial flows

Lula da Silva’s victory introduces a scenario of operational volatility for Spanish multinationals. Investor concern is focused on the sustainability of the spending cap and the management of state-owned companies, factors that act as a thermometer for government intervention in the economy.

Any pressure on financial margins or changes in the taxation of dividends remitted by subsidiaries directly affects the valuation of the parent company in Madrid.

Telefónica faces a dual challenge following the electoral process. The stability of the Brazilian real is decisive for the group’s consolidation of results in euros. Simultaneously, the digital agenda of the incoming administration tends to prioritize infrastructure expansion in low-profitability areas, which could require greater investment commitments from Vivo, its local subsidiary. However, the historical track record of Spanish companies in the country demonstrates a persistent capacity for technical dialogue that mitigates the risks of institutional breakdown.

Outlook and energy transition

This environment also opens windows of opportunity in the energy sector. The government’s commitment to the ecological transition and environmental protection favors companies like Iberdrola, positioned in renewable generation projects and distribution networks.

Market evolution in the short term will depend on the appointment of the economic team. An orthodox profile in the Ministry of Finance would facilitate the stabilization of credit spreads and reduce the country risk premium, favoring the recovery of Spanish assets exposed to the region.