Amid the record market downturn on October 26, the day after Luiz Inácio Lula da Silva’s unexpected election victory, one company managed to beat the market: Nu Holdings.
The fintech, which is the parent company of e-banking app Nubank, was the only one of the seven Brazilian fintechs listed in the United States and tracked by Finsiders Brasil, a Brazilian fintech news site, to beat the Ibovespa, Brazil’s benchmark stock index.
Lula won the October 25 second round with 51.79% of valid votes against 48.21% for Senator Flávio Bolsonaro of the Liberal Party (PL), according to the Superior Electoral Court (TSE), defying polls and online betting markets.
In the first round Bolsonaro finished ahead and investors had priced a smaller risk premium on Brazilian assets. On October 5 the dollar fell 4.12% against the real while the Ibovespa gained nearly 8%.
But Lula’s unexpected victory forced investors to adjust their positions, leading the dollar to close 8.21% higher at R$5.403, its biggest one-day gain since January 1999, on October 26. Meanwhile the Ibovespa fell 13.88%, its sharpest daily decline since March 2020, in a fall steep enough to trigger a circuit breaker, a mechanism that temporarily suspends trading on B3, the São Paulo stock exchange, during sharp declines.
The loss was even larger for investors who measure their returns in dollars, due to the declining Brazilian Real. Considering both moves, the Ibovespa lost about 20% in dollar terms in a single day, according to a Brazil Reports calculation based on Agência Brasil’s closing figures.
The Treasury also canceled debt auctions scheduled for October 27 to 29, while Eirini Tsekeridou, an analyst at Swiss bank Julius Baer, confirmed in comments carried by MercoPress that “Markets were broadly positioned for a Bolsonaro victory.”
News site Finsiders Brasil also links the wider selloff to public finances, since a government less inclined to cut spending would likely keep interest rates high for longer, making credit more expensive and eroding the profits of banks and fintechs.
Brazil’s fintechs take a hammering
Since the seven U.S.-listed fintechs trade in dollars, Monday’s session hit them especially hard.
XP Inc., a Brazilian investment platform, recorded the heaviest fall. Its shares had gained 30.93% the day after the first round, while on Monday they lost 48.36%, close to half their value. According to Finsiders, XP makes its money from buying and selling investments in Brazil, which leaves its business sensitive to investor confidence.
Agibank shed 37.60% and PicPay fell 36.38%, while Inter&Co, the holding company of digital bank Banco Inter, declined 34.91%. The drop was smaller for payment companies, although still significant, as StoneCo lost 27.44% and PagSeguro, which runs PagBank, dropped 25.17%.
But Nu Holdings fell just 16.95%, less than the Ibovespa lost in dollar terms. Finsiders notes that Nubank depends less than its rivals on the mood in Brasilia, since it also operates in Mexico and Colombia.
Fears of further tax rises add to the pressure on fintechs
Taxes were also part of the reaction, as on the day of the selloff financial site 24/7 Wall St. wrote that Lula’s win “stokes fears of further tax hikes and heavier regulation on Brazilian lenders,” in an article republished by Yahoo Finance. The two candidates had offered opposite approaches, since Lula’s government follows a more revenue-raising line, according to a Finsiders comparison of their plans, while Flávio Bolsonaro had promised to contain spending, reduce bureaucracy and cut taxes.
Lula’s government has already raised taxes on the sector once. In December 2025 he signed a law that was the government’s main bet to balance the 2026 budget, with the potential to raise about R$22.4 billion (about US$4.1 billion) in extra revenue this year. Under the law, the social contribution on net profit (CSLL) paid by payment institutions rose from 9% to 12% from April and is due to reach 15% in 2028.
Further tax changes would need Congress, where Flávio Bolsonaro’s PL will have the largest bench in both houses. Stricter Central Bank rules, which raise the minimum capital of payment institutions from R$1 million (about US$184,000) to at least R$9.2 million (about US$1.7 million) by January 2028, are instead expected to continue whoever won, according to experts quoted by Finsiders.
A rate decision on Wednesday and a finance minister only after Lula’s trip abroad
For all seven fintechs, the next moves depend on decisions that Brasilia has yet to take. The central bank announces on Wednesday whether the interest rate will stay at 13.75%, and options traders expect it to, while the first Focus survey published after the election, released on Tuesday, raised the year-end interest rate forecast from 13.25% to 13.50% and the year-end dollar forecast from R$5.05 to R$5.34.
As of Tuesday, Lula had not named a minister to lead the Finance Ministry in his fourth term, which begins on January 5, 2027. Vice President Geraldo Alckmin and Piauí governor Rafael Fonteles are among the names cited, while keeping the current minister, Dario Durigan, has not been ruled out. According to allies, Lula has postponed announcing the appointment to reassure investors, with his choice now expected after a foreign trip that starts next week.
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