Brazilian stocks plunged after Luiz Inácio Lula da Silva held on to victory in the presidential election, against expectations of a win for business-friendly candidate Flavio Balsonaro; the iShares MSCI Brazil ETF (EWZ) fell 19.8% on Monday and MercadoLibre (MELI) dropped 7.8%. The author argues Lula's policies would essentially maintain the status quo, and that MercadoLibre's weaker stock performance over the past few years stems mainly from competition from Amazon and Shopee and falling profit margins as it invests. Second-quarter revenue rose 50% to $10.2 billion, and the company became the first to record 30 straight quarters of 30%-plus revenue growth. The author sees the stock trading at a discount, with a forward P/E of around 30, and notes that analysts expect margins to expand again next year.
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