Brazil Stock Selloff Not Over, Fund Managers Warn After $126B Wipeout

The significance here is that domestic fund managers, not just foreign investors, are skeptical of Lula's fiscal discipline after his re-election, which suggests the selloff is rooted in a structural budget concern rather than a short-term sentiment shock. This affects Brazilian equities and the real most directly, with some managers already trimming volatile positions into 2027. The open question is whether Lula's government delivers credible spending cuts; without them, the caution from local asset managers could keep pressure on risk assets regardless of how global conditions evolve.