Forbes Article (Oct. 5, 2014) by Kenneth Rapoza with some electoral counts

Social Democrats Face Archrival Workers’ Party In Brazil Election Run-Off

Brazil’s most powerful political parties will go head to head on Oct. 26 in a run-off election between incumbent president Dilma Rousseff and Social Democrat Aecio Neves, who came from a third place position to beat socialist party pick Marina Silva.

Marina’s crash and burn was in part due to recent comments that she was happy keeping the currency even weaker than it already is, and voters in the highly populated south thinking the only party that can really wrestle power from the Workers’ Party is the Social Democrats.

With over 95% of the votes counted by 21:00 local time, Dilma had 41% of the votes while Neves had 34%.

Analysts will now focus on deciphering the next round. Both Dilma and Neves have been rising in the polls. It is unclear whether Marina’s voters will choose Dilma or Neves in the days ahead. New polls will likely come out later this week. The good news for the incumbent is that she was gathering momentum right along with Neves. This indicates that either the undecided voters had made their decisions and/or the Marina voters had migrated to the challenger. Either way, the fact that both Dilma and Neves rose in the polls suggests voters are — in the worst case — evenly split.

Brazilian senator Aécio Neves to take on Dilma Rousseff in an election run off on Oct. 26. To win, he will have to convince more than 65% of Marina Silva’s voters to choose him over Dilma. It will not be easy.

Some 142 million people will vote again on Oct. 26. The largest constituencies are in the wealthy South/Southeast with roughly 77.7 million voters combined.

São Paulo, the biggest city in Brazil, has 31.9 million voters accounting for 22.4% of the vote. This is generally a Social Democrat stronghold. Assuming Neves wins 65% of São Paulo, it would give him 20.7 million votes.

Minas Gerais is the second biggest market for Neves, which he represents as a senator in Brasilia. His home state has 15.2 million voters. Assuming another 65% for Neves would give him 9.8 million, though that might be asking too much. Dilma beat him with 43% of the vote in the first round as it is. He would need every single Marina Silva vote to keep Dilma’s numbers stable in that farming and mining state.

No. 3 Rio de Janeiro could be a toss up. If Rio is split in half, that’s six million for each. Assuming Dilma gets 60% of Bahia, that would give her 6.1 million and Neves four million.

Then there is the fifth largest constituency, located in the deep south. This is Rio Grande do Sul. They have 8.3 million voters. This is also a toss up. While Dilma beat Neves with 43%, Neves wasn’t far behind. Assuming a draw, that’s 4.1 million each.

Combined, the best case scenario for Neves in the top five constituencies gives him 44.6 million and Dilma 33.1 million. Unfortunately for the Social Democrats, there is more to Brazil than the top five.

The biggest differential will be in the North/Northeast states. Dilma runs away with it here. In the rich south, the differential in favor of Neves is smaller. In other words, she has more support from her traditional supporters than Neves has from his in terms of body count.

Sergipe: 54% Dilma, 23% Neves
Alagoas: 52% Dilma, 21% Neves
Pernambuco: 44% Dilma, 5% Neves
Paraiba: 55.6% Dilma, 23% Neves
Rio Grande do Norte: 60% Dilma, 19% Neves
Ceara: 68% Dilma, 15% Neves
Piaui: 70.5% Dilma, 14% Neves
Maranhao: 69.5% Dilma, 11.6% Neves
Tocantins: 50.2% Dilma, 27.6% Neves
Para: 53% Dilma, 27% Neves
Amapa: 51% Dilma, 25% Neves
Roraima: 33% Dilma, 43.6% Neves
Amazonas: 54.4% Dilma, 19.4% Neves
Acre: 29.7% Dilma, 29.8% Neves

In those states, Dilma received 15.6 million votes to Neves’ 4.72 million for a 10.88 differential in favor of the incumbent. Neves needs to receive every vote from Marina in those states, otherwise Dilma takes the North/Northeast popular vote without a fight.

In the wealthier states that went to Neves, the Minas Gerais senator garnered 19.73 million votes to Dilma’s 12.58 million, or a differential of just 7.15 million.

The easiest way to look at it is by taking the total vote count thus far. For Dilma, it’s been 43.26 million voters in her favor versus Neves’ 34.89 million. Marina received 22 million. In order for Neves to win, he needs to get over 65% of the Marina vote. Even at 65% of the Marina vote, Neves adds around 14.3 million to his tally, or 49.1% of the popular vote…not enough to take the presidency in January.

No one is expecting Dilma to walk away with the election at this point. It will be a nail biter.

However, for Neves to skew the elections in his favor he will need a popular figure, most likely from the market, to come out in support of him. Investors will look for hints as to who might be in charge of a Neves Finance Ministry, or what his take is on the foreign exchange rate and inflation. Brazil’s real is currently trading at its lowest level since the financial crisis of 2008-09.

Dilma, meanwhile, has some stats on her side. The poor are getting richer. And so are the middle class. Educational attainment is improving, and the unemployment levels — while not entirely accurate — remain low. She will have to regain trust in constituents tired of political corruption and a general laziness about public service and fair play. She will also continue to make overtures to the market about her plans to change course on economic policy, something investors are looking forward to next year.
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