Quicker than Expected!

The news from the voting intentions front, concerning the Brazilian Presidential Election
later this year, is much more dramatic than we would have expected. The recent positive
momentum in favor of the Workers Party`s (“PT”) candidate, Dilma Rousseff has
apparently ceased, and the momentum has begun to move in favor of Jose Serra
(“PSDB”), the current Governor of the State of Sao Paulo.

The First Round

As noted in recent Ibope polls the momentum had driven the electorate`s voting
intentions for Dilma up to the 28% - 29% level by mid March, assuming a four candidate
first round, Scenario 1, which also includes Ciro Gomes (“PSB”), and Marina Silva
(“PV”).

However, the recent Datafolha poll published last weekend shows an immediate and
relatively significant turn of events, with Dilma`s recent positive progress ceasing, and
even declining to the extent of one percentage point, while Jose Serra has increased by
four percentage points. The numbers are as follows:

#`s in %`s 18/12/2009 25/02/2010 26/03/2010

Jose Serra 37 32 36
Dilma Rousseff 23 28 27
Ciro Gomes 13 12 11
Marina Silva 8 8 8
Undecided 19 20 18

It is not wise to conclude too much from one poll, and we will await confirmation of the
latest numbers, and any newer developments as the electoral story unfolds. However, the
poll must be a disappointment for President Lula and the PT, and perhaps even more, a
relief for Jose Serra and PSDB.

The reasons behind the changes may be that Serra has recently been specific for the first
time that he indeed is a candidate for the Presidency. Also, there has been increased
media exposure for him as he has takes the same route as President Lula and Dilma in
inaugurating public works etc. Nonetheless, it must be difficult to see Dilma making no
progress when there are 18% of the population undecided, and a further 19 percent still
intending to vote for candidates that have no chance of being elected.

In Scenario 2, Ciro Gomes drops out, and there are only three candidates:

#`s in %`s 18/12/2009 25/02/2010 26/03/2010

Jose Serra 40 38 40
Dilma Rousseff 26 31 30
Marina Silva 11 10 10
Undecided 22 21 20
Jose Serra gets back to where he was in December, and Dilma has improved her position
by four points over where she was in December.

Regionally, Serra has benefited from a reduction of undecided voters in the South of
11%, 10% of which have indicated an indication to vote for him. In the Southeast Serra
has the advantage over Dilma of 40% to 24%, in the North/ Center West, he is up by 48%
to 38%, but in the Northeast, Dilma has a 14% advantage with 49% to 35%.

Interestingly, Serra is running much better among women (37% to 22%) than amongst
men where he wins by only 35% to 32%.

Among the electorate that think that Lula`s government is either good or very good, Serra
is losing to Dilma by only 1%, 33% to 32%.

The Second Round

#`s in %`s 25/02/2010 26/03/2010

Jose Serra 45 48
Dilma Rousseff 41 39
Undecided 14 13

Perhaps the worst news for Dilma is that in a second round runoff with Jose Serra she has
gone from 4 points to 9 points behind.

The point of view that Dilma`s advantage is being proposed, packaged and presented by
President Lula, a President who still has an approval rating of 76% among the Brazilian
population, needs to be re-evaluated. The speeches of Dilma eulogizing Lula rather than
presenting herself and her agenda may well be wearing a little thin with voters….and
there`s still a long way to go.