Ambev shares fell 15.5% on Monday, not because of company-specific financials but after far-left candidate Luiz Inácio Lula da Silva unexpectedly won Brazil's presidential runoff against Flávio Bolsonaro, whom investors had been betting on. Ambev had rallied after Bolsonaro led the first round on Oct. 4 with 47% to Lula's 45%, but Lula won the second round 51.8% to 48.2%, the first time since 1988 that the first-round leader did not win. Lula has promised large welfare payments and may increase business regulation, which triggered a sell-off in Brazil's currency and bonds, raising inflation risk and reducing the value of Ambev's real-denominated earnings in U.S. dollar terms. Ambev trades at a 14.7 P/E and a 4.1% dividend yield, and the company reports third-quarter earnings on Thursday, Oct. 29.
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