CNBC reports that Lula beat Bolsonaro 51.8% to 48.2% in Brazil's 2026 presidential election.
Grupo Financiero Galicia stock is selling off on the news, but Grupo Financiero Galicia is based in an entirely different country: Argentina.
Grupo Financiero Galicia also gets 99.9% of its revenue from Argentina, not Brazil.
Shares of Argentine financial services holding company Grupo Financiero Galicia ADR (NASDAQ:GGAL) joined the ongoing rout of Latin American stocks Monday, falling 7.3% through 11:40 a.m. ET.
Why? Next door in Brazil, incumbent President Luiz Inácio Lula da Silva appears to have beaten challenging conservative candidate Flávio Bolsonaro 51.8% to 48.2% in the second, run-off round of that country's presidential election. This came as a surprise to investors who had bet that Bolsonaro's victory in the first round of voting, earlier this year, implied a likely victory for the conservative in Sunday's contest as well.
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But that didn't happen.
Image source: Getty Images.
Adding to the intrigue, Bolsonaro is refusing to concede defeat, alleging the incumbent administration suppressed voting in key Bolsonaro-leaning districts. Moreover, according to Bloomberg, Argentine President Javier Milei is now the only South American leader who has not chimed in in support of Lula by recognizing the results.
Momentum seems on Lula's side, however, and barring yet another surprise, it seems likely the current president will remain president in Brazil through another term -- ending in 2030.
Could Milei's intransigence redound to Grupo Financiero Galicia ADR's injury in a way that would explain today's sell-off? Honestly, I doubt it. According to data from S&P Global Market Intelligence, Grupo Financiero Galicia gets 99.9% of its revenue from business done within Argentina, largely insulating it from goings-on next door.
Priced at 7.5 times current-year earnings estimates and expected to double its earnings per share over the next two years, now might be a good time for investors to jump on the sell-off and snap up some cheap Grupo Financiero Galicia shares!
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.